Carried Interest Calculation & Tax Loophole | Understanding PE & VC

We learn what carried interest is and how to calculate it for PE & VC funds, and also discuss the carried interest tax loophole. ✅ Download the Excel template: https://mailchi.mp/3bb4b137dab3/e8eb1... 🚀 If you want to master the finance skills & frameworks to successfully scale technology startups, secure your spot in my "Finance for Startups" program: https://www.ericandrewsstartups.com/f... (special offer available) 👉 Master the 20% of Excel that actually matters in 2.5 hours: https://www.ericandrewsstartups.com/e... ⚠️ Most founders are off by 2–4x on CAC payback. See your real number here (free): https://paybacklie.com/ Communities: 💼 Linkedin:   / eric-andrews-1624b656   💻 Newsletter: https://mailchi.mp/1cf66809482f/mcoa7... Related Financial Modeling Videos: 🚩 How to Build a 3-Statement Financial Model:    • 3 Statement Financial Model | Building Fro...   🚩 Solving a Finance Case Study | Interview Prep:    • Finance Case Study Example | Finance Inter...   ▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬ Private fund managers - whether in private equity, venture capital, or hedge funds - make the vast majority of their money from a share of the profits that their funds generate - this is called carried interest. The general structure of a fund is that on one side you have investors in the fund - they are called limited partners. On the other side, you have the team that manages the fund and investments - they are called general partners. The general partners charge fees and take a percentage of profits from the fund returns (carried interest) in exchange for managing the money. This basic setup is the same for most private funds. But for certain types of funds, the carried interest has a favorable tax treatment. This is what we refer to when we are talking about the carried interest loophole (tax loophole). In this video, we talk step-by-step through an example breaking down the carried interest calculation as well as an analysis of the carried interest tax loophole and who it benefits. SECTIONS: 0:17 intro to carried interest & the tax loophole for VC & PE 1:22 structure of a private investment fund (operations, fees & carried interest calculation) 6:18 how carried interest is classified and taxed (PE & VC vs. hedge funds) 10:16 debate around the carried interest tax loophole - the two sides of the argument I hope that you can now understand what carried interest is and the tax loophole associated with it. If you have questions - please leave comments below and I'll try to help. Cheers! ► Subscribe for more finance videos: https://bit.ly/EricAndrewsSubscribe #carriedinterest #taxloophole #venturecapital