Fund Waterfall Calculator
The fund waterfall calculator models the economics of a venture capital fund: management fees, carried interest, hurdle rates and the order in which profits are split between limited partners (LPs) and general partners (GPs). Whether you are a founder sizing up an investor’s incentives, an emerging manager preparing for a first close, or a family office evaluating a commitment, this tool shows how 2-and-20 terms behave across a ten-year fund life. Set the fund size and fee structure, then adjust exit multiples on 8-12 portfolio investments to see gross returns, net returns, carry earned and the full waterfall breakdown.
How the fund waterfall calculator works
The simulator applies a simplified European-style waterfall over a fund life you define, typically ten years. Capital is returned to LPs first, then the hurdle — a preferred return, usually 8% a year — is satisfied, the GP catches up to its carry percentage, and remaining profits split between LPs and carried interest. You control the committed fund size, management fee, carry percentage, hurdle rate and the exit multiple of every portfolio company, so you can stress-test scenarios from a full write-off to a 10x winner. Results update live as you move each slider.
Fund economics simulator
Who should use the fund waterfall calculator
For founders, it reveals what motivates a GP: management fees cover the operating costs, but carry drives behaviour. For emerging managers in the Gulf, it tests whether a structure clears an 8% hurdle before any carry accrues. Family offices in Bahrain, the UAE and Saudi Arabia can benchmark LP net returns against regional venture data. Read the outputs as a guide, not a promise: a net LP DPI above 2.0x is rare, and most funds distribute between 0.5x and 1.5x of paid-in capital before carry. The tool does not model reinvestment, follow-ons, recycling, debt or tax. Pair it with our cap table guide and startup runway maths when planning your own round.
Fund waterfall calculator: methodology and assumptions
The model deducts annual management fees, charged at the stated percentage of committed capital, from the distributable pool. Each of the 8-12 investments deploys an equal share of committed capital and exits at its slider multiple. The waterfall is European-style: return of capital, preferred return as simple interest on committed capital at the hurdle rate, GP catch-up, then the carry split. No compounding, recycling or clawbacks are modelled. GCC benchmarks: regional funds typically charge 1.5-2.5% management fees with 15-25% carried interest and a 7-10% hurdle. Emerging managers should study fund structures under ADGM and DIFC, where most Gulf funds domicile, and benchmark return expectations against CFA Institute guidance. Outputs are illustrative and do not constitute investment advice. Compare fund outcomes with our pre-seed pitch deck guide when raising from Gulf investors.
Frequently asked questions
How does a 2-and-20 fund structure work?
2-and-20 means a fund charges a 2% annual management fee on committed capital plus 20% carried interest on profits. The fee covers salaries and operations; the carry rewards the GP when LPs profit. In the GCC, fees of 1.5-2.5% and carry of 15-25% are common, with carry usually paid only after LPs recover their capital.
What is an 8% hurdle in a fund waterfall?
A hurdle, or preferred return, is the minimum annual return LPs must receive before the GP earns carry. With an 8% hurdle, the LP gets its capital back plus 8% simple interest per year before any catch-up. If the fund underperforms the hurdle, the GP earns nothing beyond its management fees.
What is the difference between DPI and MOIC?
MOIC (multiple on invested capital) is total distributions plus remaining value divided by paid-in capital. DPI (distributions to paid-in capital) counts only cash actually returned. DPI is the more conservative figure because it ignores unrealised value, so a fund can show 2.5x MOIC yet lower realised DPI.
How does a GP catch-up work?
After LPs receive their capital back and their preferred return, the catch-up lets the GP take profits until it reaches its carry percentage of total profits. In an 80/20 split with an 8% hurdle, the catch-up is capped at a quarter of the preferred return. Beyond it, remaining profits share 80/20 between LPs and GP.
Curious about the other side of the table? See how founders negotiate ownership in our SAFE vs convertible note comparison, or explore Valu.vc Venture Studio if you want to build instead of invest. Questions about your own raise? Contact us.