Fund Economics — Fee, Carry & Waterfall
The model every emerging GP needs for the LPA conversation and every LP / family office needs before signing the subscription docs: lifetime management fees, then the full 4-tier European whole-fund waterfall — return of capital, preferred return, GP catch-up, and the carry split — resolved into net-to-LP MOIC and the gross-to-net spread. Change carry, hurdle, or the catch-up and watch where every dollar of profit lands. Pure client-side math.
Inputs
Fund
Management fee
Carry & waterfall
LP / GP Economics
Distribution Waterfall — who gets each dollar of proceeds
Net-to-LP Sensitivity — LP net MOIC across gross fund multiples
Methodology — fees, waterfall tiers & assumptions
Lifetime fees — investment-period fee on committed capital for the investment period, then the (typically stepped-down) post-period fee on net invested capital for the remaining term. Fees are paid from commitments, so invested capital = committed − lifetime fees (solved in closed form). Gross proceeds = gross MOIC × invested capital.
European (whole-fund) waterfall, 4 tiers, distributing gross proceeds P against total LP contributions C = committed:
① Return of capital — LPs receive their contributions back first: min(P, C).
② Preferred return — LPs then receive a compounded hurdle: Pref = C × ((1 + h)^T − 1) (whole-fund approximation over the fund term T).
③ GP catch-up — with full catch-up the GP receives 100% of the next dollars until it holds carry% of all profit distributed so far: catch-up = carry × Pref / (1 − carry).
④ Carry split — everything above is split carry% / (1 − carry%) GP / LP.
If proceeds don't reach a tier, distribution stops there (e.g. a fund that only returns capital pays no carry). "No catch-up" skips tier ③ and the GP earns carry only on profit above the pref.
What's intentionally omitted — actual cash-flow timing and a true IRR (this is a multiple-based whole-fund approximation; a real pref accrues on drawn capital over time), American deal-by-deal carry with clawback, management-fee offsets / waivers, recycling, GP commit, and tax. Use the Fund Returns / Power-Law Modeler for the outcome distribution and this tool for the fee/carry split.
Educational financial-modeling tool — not investment, legal, or tax advice and not a substitute for the LPA. Waterfall mechanics vary materially by fund; confirm every term against your actual fund documents and counsel. All math runs in your browser; no inputs are sent to a server.