How does carry work for SPVs?

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. 

Example:

  • 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.
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