Mercer's Sebusch: Short 2-to-5-year carry vesting destroys venture fund alignment
Eric Seabush · Raelan Lambert, John Jackson, and Erik Sebusch – Inside Mercer Consulting (EP.345) · Oct 23, 2023 · at 49:08
Erik Sebusch, venture capital research leader at Mercer, critiques recent GP vesting terms across 10-year venture fund vehicles.
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“I've seen An explosion of short vesting schedules of two to four to five years, and it's just not great alignment. I don't want a GP to be able to leave after two years, get a hundred percent of their carry, sit on the beach, and now the team or the LP base have to dilute the carry to bring in another partner, and then somebody reaps those benefits. I think that is proliferated. I don't know why some of the law firms have allowed this, I think it's bad for the GP as well as the LP, and I've seen some of the best funds fall apart because of that.”
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