The lead for a syndicate SPV determines the amount of carry for the SPV.
Carry refers to carried interest and represents the percentage of profits that will be paid to a lead after capital is returned to investors.
- SPV raises $1M with 20% total carry
- Portfolio company exits for $10M
- The carry will be ($10M - $1M) * 20% = $1.8M
- As a result, $8.2M will be distributed to LP's and $1.8M will be paid to the lead as carry.