Venture Capital and Private Equity Contracting, 2nd Edition

6

Compensation Contracts

This chapter introduces a new dataset from 50 private investment funds from 17 countries in Africa, North and South America, Europe, and Australasia. We analyze compensation in regards to fixed management fees (as a percentage of fund size), performance fees (the carried interest percentage), clawbacks (reduced fees for poor performance), and cash versus share distributions (payment to institutional investors). We control for a variety of factors including market conditions, institutional investor, and fund manager characteristics, including education and experience as well as fund factors such as stage and industry focus, among other control variables available in the new detailed international dataset. The data indicate ...