Venture Capital Compensation, Part II

In writing about the recently released Dow Jones survey of private equity compensation, I emphasized that the figures were “pre-carry”. In other words, the seven-figure average VC guy income is based on salary and “profits” (and don’t even get me started about how private equity firms calculate pre-carry profits), but not on any income from investments.

So what happens if you put the carry figure back in and get the total comp for the average VC in 2004/05? Nothing. Nothing? Yes nothing. Okay, almost nothing: The comp package goes up by a scant 4.7%. That’s it. That’s the extra income the average VC earned in the period for their bold investments over the prior few years.

Fascinating, non? While you might have expected that the 2004/05 period was a bad one for the average venture investor — there wasn’t much to harvest from the 1999/2000 vintage funds — it is remarkable seeing it numerically in the carried interest figure.

Related posts:

  1. Venture Capital Compensation
  2. Flexibility in Venture Capital
  3. Options as the Immaculate Compensation
  4. So Many Venture Firms, So Little IRR
  5. Serial Persistence, the Kleiner Effect, & Lead Swaps in Venture Capital