Can Venture Fund Fees Make Someone a Billionaire?

Bilal Zuberi says a partner in one of the big venture funds can become a billionaire on management fees alone, without having to show investment returns.

Venture funds keep raising bigger pools of capital, and the partners get rich on the fees. For each dollar raised, the fund collects roughly 20 percent in fees. A $10 billion fund therefore produces $2 billion in fees over 10 years, and raising the fund locks the fees in as guaranteed income. Few people can raise a fund that large. In the example, a sole managing partner spends a billion dollars over the 10 years on the team, events, and the operating budget, and keeps the other billion dollars.

Most people cannot raise a $10 billion fund, and he is not about to raise one either. He raised a $150 million fund, and the fee incentive is not lost on him.