Why $100M VC Funds Only Invest $80M (The Fee Structure Exposed)

Understanding the 2 and 20 model is critical if you're raising capital. Here's exactly what your investors take, when they take it, and why it matters for your startup. Most founders don't realize that when a VC fund raises $100 million, only $80 million actually gets invested. The rest disappears in fees before a single cheque is written. This shapes everything about how your investors behave... from which companies they back to how aggressively they push for exits. In this video, I break down the complete fee structure used by venture capital and private equity funds, including the deal-by-deal alternative that my firm uses for superior alignment. What you'll learn: The 400-year origin story of carried interest (it started with ship captains) Why your $100M fund only has $75-80M to actually invest How the four-tier waterfall distribution works in practice European vs American waterfall structures and which protects founders Why VCs need 10x returns just to hit their hurdle rates The deal-by-deal alternative and why alignment is better How to predict investor behaviour based on fee structures Timestamps: 0:00 - Intro 1:01 - Roadmap 1:56 - The Origin Story 4:18 - The Management Fee 8:17 - The Carried Interest 13:17 - The Alternative Model