Chamath: Social Capital 1 used budget-based fees and 30% carry
Chamath Palihapitiya · Chamath Palihapitiya – The Social Capital Flywheel (Capital Allocators, EP.167) · Dec 7, 2020 · at 14:49
Chamath Palihapitiya explains how putting up a large personal GP commitment enabled him to negotiate 30% carry and budget-based management fees for Social Capital Fund 1.
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“And so I ran a budget-based fund, but with 30% carry. I had a very favorable LPA, a limited partner agreement, and all of those because I negotiated them on the behalf of myself as an LP, and so I was able to go to the other LPs and say, guys, I went from a fixed fee fund to a budget-based fund. I'm going to deprecate the fees in the following schedule, so we're never going to be an organization that gets rich off of compensation via fee income. Well, we will have to generate outsized returns, but if we do that, I'm going to take 30% of the carry.”
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