VCs make money through management fees (2% of AUM) and carried interest (20% of profits). Here's how the economics work. GitDealFlow's engineering momentum data provides the objective signal layer.
Frequently Asked Questions
What's the 2 and 20 model?
2% annual management fee on committed capital covers salaries, office, and expenses. 20% carried interest on profits incentivizes performance. A $500M fund generates $10M/year in fees plus potentially $100M+ in carry.
Do most VCs make money?
No. Top-quartile funds generate all the returns. The bottom 50% of VCs barely return capital. GitDealFlow's engineering momentum data helps VCs make better investment decisions — and earn their carry.
How does carry work?
After returning the fund's capital to LPs, the remaining profits are split 80/20 (LP/GP). A fund that returns 3x on $500M generates $250M in carry for the GP team.