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Angels, Dragons and Vultures: How to Tame Your Investors And Not Lose Your Company by Simon Acland

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Fees

The main source of income for a venture capital firm is the management fee it receives from the institutions or individuals who invest in its funds. Although there has been some downward pressure toward 2%, the industry standard is still generally 2.5% per annum, normally paid quarterly. A simple rule of thumb, therefore, is that a firm with $20 million under management will have revenue of $500,000; a firm with $50 million under management, revenue of $1.25 million; one with $100 million, revenue of $2.5 million; and so on. Before you approach a venture firm for funding, find out how much capital they have under management and how many staff they employ, and you will be able to gain a quick idea of how comfortable they are – whether they ...

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