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Podcast: Tokens of Wisdom
Episode: Episode 26: Waterfalls
Description: Today we’re keeping the performance-based comp discussion going and looking at “Carried Interest” or “Carry” for short: performance-based compensation for closed-end funds – VC, PE, etc. One big structural difference from open-ended funds is that the GP typically doesn’t get performance-based comp on paper (i.e., unrealized) gains. For a refresher on closed-end vs open-end funds, listen to Episode 9.Instead, proceeds from monetization events get distributed among the partners in proportions dictated by a complicated cascading mechanism in the fund’s offering documents. That cascading mechanism is called: The Waterfall!Key Points From...