Carried Interest

Carried interest, also called "carry", refers to the portion of an investment's profits that are paid to the investment manager.

Carried interest, also called “carry”, refers to the portion of an investment’s profits that are paid to the investment manager. Carried interest is common among hedge funds, private equity, and venture capital, as well as for angel investments done through investment funds (for example, those on AngelList or FundersClub).

For example, say you invested $1,000 through an investment with 20% carried interest. If the investment return overall at the end was 50% (or $500), then 20% of that (or $100) would go to the fund manager as carried interest, and you would receive a net return of 40% (or $400). When reviewing projections and financials, be sure to note if returns are shown “net of carry”, indicating the actual amount you’d receive after the carried interest charges have been paid.

Many funds also charge an annual “assets under management” fee (AUM), typically 1-2%. In the case of your $1,000 investment, that would be $20/year. If it took 7 years to see that 50% return (not uncommon with angel investments, if they return at all), then if the charges were “2 and 20” (meaning a 2% AUM fee and 20% carried interest), you’d end up paying $140 in those AUM fees, plus the $100 in carried interest. Your actual return would be $1,260 on your $1,000 investment.

Want to learn more but aren’t sure where to start? You can explore 168 crowdfunding investment platforms in our database and learn more about the nuts and bolts of crowdfunding and alternative investing on our blog. Did you know you can use a self-directed retirement account to invest in many alternative investments? Rocket Dollar makes it easy, and when you sign up using that link you'll be helping to support YieldTalk.

EquityMultiple

Outstanding

EquityMultiple stands out among real estate crowdfunding investment platforms because their main investors and senior leadership come from institutional real estate finance, rather than being VC-funded. Seed funding for the company was provided by Mission Capital (later acquired by Marcus & Millichap) and their co-founders and board of advisors come from the New York real estate finance and law community. They offer fewer investments than some other platforms, but that’s a deliberate choice to take a more curatorial approach to dealflow. Overall, EquityMultiple is a solid choice for accredited investors looking for a hands-off way to invest in commercial real estate.

"Gain exclusive access to high-yield commercial real estate deals"

First National Realty Partners

Excellent

First National Realty Partners (FNRP) is a commercial real estate private equity firm that focuses on grocery-anchored commercial shopping centers, offering both investments in individual properties and an Opportunity Fund across all of their offerings.

"First National Realty Partners (FNRP) is a rapidly growing commercial real estate private equity firm that owns and operates real estate throughout the United States. FNRP focuses on expanding its portfolio by acquiring market-dominant, well-located commercial assets well below replacement cost. "

Percent

Excellent

Percent aggregates private-credit investments from a range of originators offering small-business, crypto, venture loans, litigation finance and more, including international debt investments. Low minimums.

"Percent unlocks exclusive private credit investments for your portfolio. Access select alternative investments on the platform powering the future of private markets."

Carried Interest