Reference

Two and twenty is still the answer, but the interesting part is the tail

The median is exactly what you expect. What a first-time manager needs is the distribution around it, the step-down schedule nobody mentions, and how rare a hurdle actually is.

Two and twenty. That is the answer, it is still the answer, and if somebody has told you otherwise about the middle of the market they are wrong. Across about 2,000 US funds, Carta found the median venture fund charges a 2% management fee during the investment period and takes 20% of profits.

The median is not the useful part, though. A first-time manager is negotiating at the edges of that distribution, and the edges are where the published advice goes quiet.

The fee: 2% is the median and the mode

It is also remarkably stable. For every vintage from 2018 through 2025, Carta reports the same median of 2% and the same 75th percentile of 2.5%. The one place the distribution moved was the bottom: the 25th percentile fell to 1.5% in 2021 and 2022, the two busiest fundraising years in recent memory, when some managers cut fees to compete for commitments.

The step-down almost nobody mentions

This is the part that changes the arithmetic of running a firm, and it is routinely left out of “2 and 20” as a description.

So “2%” describes the first five years — Carta puts the median investment period at five years — and not the fund’s life. Measured across the whole life, the number a manager actually collects is lower: Carta’s annualised figure is 2.16% at the one-year mark, falling to 1.94% by year eight.

For a first-time manager modelling whether the management company survives, that decline is the fact that matters. Fee income falls exactly as the portfolio work peaks, and it falls on a schedule you agree to before you have raised anything.

LPs, for their part, treat the step-down as a baseline expectation rather than a concession:

Carry: 20%, and the tails move

Carry is even more concentrated than the fee. Carta reports that across every vintage from 2018 through 2025, the middle 50% of new venture funds pay exactly 20%. There is no negotiation happening in the middle of this market.

The tails do move, and they move in opposite directions by fund size:

Which is to say: the discount is available at the small end, and the premium is available at the large end. A first fund is at the end where the market takes rather than gives. Carta attributes the upper tail to established managers with the leverage to ask — and notes the 90th percentile reached 30% in 2025, its highest in the series.

The bottom tail moved for the opposite reason: the 10th percentile for carry dipped to 15% in 2022 and 16% in 2023, when raising was hard and some managers traded economics for a close.

The hurdle: rarer than you would think

A preferred return, or hurdle, is the threshold a fund must clear before the GP shares in profits. The LP-side literature treats it as a given — ILPA’s Principles assume one and specify how the waterfall around it should work. In venture, the measured reality is that most funds do not have one.

Nine in ten venture funds take carry from the first dollar of profit. This is one of the genuine structural differences between venture and buyout terms, and it is worth being precise about which convention you are quoting when an LP asks — an LP whose experience is in private equity may assume a hurdle you have not offered.

Where a hurdle does exist, ILPA takes a firm view on how the waterfall around it should be built:

Note what ILPA is and is not. It is the limited partners’ association stating what LPs should expect — a negotiating baseline, not a measurement of what funds do. It sets no fee or carry percentage anywhere in the Principles. Read it for the structure of the ask, and read Carta for what the market actually settled on.

Your own commitment

The GP commitment is the term most often underestimated by first-time managers, because the headline 1% is a large-fund number.

The dispersion at the small end is the point. A first-time manager may be asked for several times the conventional 1%, because LPs backing an untested manager look for alignment they cannot get from a track record. Budget for that alongside the formation costs, not after them.

Limits of these figures

Everything empirical above is one source: Carta’s fund administration clients, roughly 2,000 US funds, through October 2025. That population skews toward newer and smaller venture funds, which is useful for this audience but is not the private fund universe. Funds can opt out of the sample, and the firm notes historical figures shift as administrative lag resolves.

Nothing here is drawn from the SEC filing record, because the filing record does not contain it. Form D captures no fee or carry terms at all. When this site reports something computed from filings it says so and shows the count; this page is the other kind, and the distinction is deliberate.