Fund Life Calculator
The formula
What the fund economics tells you
The fee-stack arithmetic: management fees shrink the invested base, carry takes a fifth of what remains — this converts a promised gross MOIC into the LP's probable net.
Calculation: Net MOIC ≈ ((commit − fees) × gross − carry on gains) ÷ commit. Enter your inputs and every substitution is shown below the result.
Reading the result
A 2.5× gross commonly arrives as 1.7–1.9× net over ten years; the haircut line is what negotiation is actually worth.
Rules of thumb: Standard 2/20 with step-down after year 5; venture fees 1.5–2.5%
Limitations and best practice
This approximation ignores hurdles, recycling and deal-by-deal carry — each can swing a half turn. Extension years at full fee are the silent killer.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Do fees really take that much?
What is a fee holiday?
Source & methodology
ILPA fee principles; standard 2-and-20 arithmetic.
Fund Life: what this tool answers
This page was written for one job: turning your own inputs into a defensible figure, with the working shown. There are plenty of pages about Fund Life; almost none of them show the working. This one does: the formula, every input, a fully computed example, and a sensitivity analysis calculated live from this engine’s own defaults.
A calculation like this one is worth roughly as much as a careful sentence: it forces several vague considerations into one comparable quantity. Once Fund Life is on the table, the argument can stop being about impressions.
The useful way to hold Fund Life is as a ratio with a story attached: Net MOIC ≈ ((commit − fees) × gross − carry on gains) ÷ commit says how the parts combine, and the 1.19 × figure above is simply that sentence written in numbers. Everything that follows unpacks one clause of the sentence at a time.
What makes a calculation page trustworthy is that its copy is derived from its own arithmetic: here net MOIC to the LP = 1.19 ×, recomputed every time a field changes, and the sensitivity section ranks the inputs that move the result — Gross MOIC first, at ≈9.1 % of the headline for a ten-percent error either way in that input — which is the thread the rest of this guide pulls on.
The Fund Life formula, explained
The engine implements a single stated model: Net MOIC ≈ ((commit − fees) × gross − carry on gains) ÷ commit. There is no hidden coefficient and no login-gated precision — the formula printed is the formula executed, which is also what makes the result citable.
LP commitment ($) (example value 10,475,152) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. The example value is there to demonstrate the mechanics, not to describe your situation — overwrite it.
Management fee (%/yr) (example value 2) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Enter it exactly as your document states it — quoted annual, monthly and effective rates are three different numbers.
Carried interest (%) (example value 20) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Check the convention first: if the source says “6.5 % per year”, type 6.5 and let the formula do the rest.
Gross MOIC (×) (example value 3) is a plain measured quantity — the unit shown in the label is the unit the formula expects. The example value is there to demonstrate the mechanics, not to describe your situation — overwrite it.
Fund life (years) (example value 23) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If the period is partial, decide whether you mean elapsed or planned time and keep that meaning across every field.
A fully worked Fund Life example
The tool prints its own working; this is the same arithmetic on the example values, reproduced so you can follow it by hand. Starting figures: LP commitment ($), Management fee (%/yr), Carried interest (%), Gross MOIC (×). The endpoint of that chain is 1.19 × of net MOIC to the LP, sitting in the “Fees ate most of the venture premium” band.
- Fees = $10,475,152 × 2% × 23 = $4,818,570
- ($10,475,152 − $4,818,570) × 2.5 − carry $1,696,975 = 1.19× net
Total management fees — $4,818,570. Compare it against the main result of 1.19 × before drawing conclusions.
Carry paid to GP — $1,696,975. If your inputs change, this is usually the first companion figure to move.
Gross-to-net haircut — 52.5 %. This is the number experienced users quote when the headline alone would mislead.
Overwrite any input above and every line of this example updates with it — the substitution is live, not a screenshot of somebody else’s numbers.
The Fund Life corridor: your result across a realistic band
Read this table as the practical error bar on the headline figure. It answers the question people actually have after seeing a single number: how wrong could this be if the main input is off by ten or twenty percent?
| Gross MOIC setting | Net MOIC to the LP |
|---|---|
| 80 % of the example value | 0.97 × |
| 90 % of the example value | 1.08 × |
| example inputs | 1.19 × |
| 110 % of the example value | 1.30 × |
| 120 % of the example value | 1.40 × |
The corridor runs from 0.97 × to 1.40 × across that band — which is the range worth planning inside rather than the single 1.19 × point estimate. Reproduce it in the form above by editing Gross MOIC alone; the substitution steps will follow your figures exactly.
The levers behind Fund Life, ranked by effect
This list was computed for this specific engine just now: each numeric input was nudged ±10 % while every other field held its example value, and the net MOIC to the LP was recalculated from scratch. Read it as a map of where Fund Life is fragile — drawn for the example inputs, which is the map you want when deciding what to measure carefully.
- Gross MOIC: ten percent up gives 1.30 ×, ten percent down gives 1.08 × — ≈9.1 % of the net MOIC to the LP either way
- Nudge Management fee by ±10 % and Fund Life lands between 1.09 × and 1.29 × (sensitivity ≈8.5 %)
- Nudge Fund life by ±10 % and Fund Life lands between 1.09 × and 1.29 × (sensitivity ≈8.5 %)
- Carried interest +10 % → Fund Life = 1.17 × · −10 % → 1.20 × (the net MOIC to the LP shifts ≈1.4 %)
- LP commitment +10 % → Fund Life = 1.19 × · −10 % → 1.19 × (the net MOIC to the LP shifts ≈0.0 %)
Gross MOIC is the dominant lever here: ten percent either way moves the result by about 9.1 %, from 1.08 × to 1.30 ×. Spend your verification effort there first, and Management fee is effectively tied with it (≈8.5 % for the same nudge), so verify the pair together. The remaining fields can sit at safe defaults without materially changing the answer — knowing which is which is what separates a careful calculation from an anxious one.
Is your Fund Life good — reading the result bands
Nobody acts on a bare figure — they act on a figure with a comparison attached. The verdict attached to the default calculation — “Fees ate most of the venture premium” — is one band on a ladder your own figure may sit somewhere else on. Before treating the band as fact, note its width: ten percent either way on Gross MOIC already spans 1.08 × to 1.30 ×. The practical reading rules: read the band as a starting hypothesis, then test it: change the two dominant inputs by ten percent and see whether the verdict survives. Verdicts that survive stress are the ones worth acting on.
Where Fund Life sits next to similar measures: this tool answers “how much is the Fund Life”, while the related calculators answer “what do I do about it”. Reading the result alone tends to over-weight a single snapshot; pairing it with the companion tools above turns the number into a decision.
The errors that quietly break a Fund Life figure
This approximation ignores hurdles, recycling and deal-by-deal carry — each can swing a half turn. Extension years at full fee are the silent killer. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Copying a single headline number without checking the companion outputs. The tool reports Total management fees, Carry paid to GP and Gross-to-net haircut alongside the main result precisely because Fund Life in isolation misleads — the secondary columns are where outliers and trade-offs show up.
Attention is also misallocated between fields. Having measured this engine, we can say where it belongs: Gross MOIC first, everything else second.
Another is comparing across contexts: a Fund Life computed with one set of conventions should never be lined up against a figure computed with another. Check the inputs behind both before ranking them.
A quick check for any Fund Life figure
- Compare the result with one independent method or published benchmark.
- Check that every field the formula needs actually arrived from a document, not from recollection.
- Re-verify Gross MOIC against a source document — ten percent of error there moves the headline by ≈9.1 %.
- Verify each input against its original source document, not memory.
- State, in one sentence, which convention each rate, unit or period in the form is using.
- Run the ±10 % stress on the top two levers and check that your conclusion survives both.
Five steps from raw inputs to a figure you can defend
The tool does the arithmetic; the routine below is what makes the arithmetic trustworthy. Five steps, a minute total — and afterwards you will know not just what the number is, but which assumption produced it.
Step 1 — gather before you type. Fund Life depends on lp commitment ($), management fee (%/yr), carried interest (%), gross moic (×), fund life (years). Collect them from a source document — a statement, a report, an invoice, a log — rather than from memory, because recalled inputs are the single largest cause of wrong results. Comparisons are cheap: run the identical calculation for the alternative and look at the gap.
Step 2 — start from the case you can defend. Enter pessimistic-but-honest figures first; the optimistic run is a ceiling, not a plan. A conclusion that holds on conservative inputs holds everywhere. Comparisons are cheap: run the identical calculation for the alternative and look at the gap.
Step 3 — isolate your variables. Change one field, observe, revert. The live sensitivity list does the ranking for the default inputs; verify it against your own, because dominance shifts when the starting point shifts. A result worth acting on survives having its two shakiest inputs halved.
Step 4 — compute a corridor, not a point. Three runs — worst, likely, best — turn Fund Life from a snapshot into a range. Plan against the pessimistic end and treat the optimistic end as the upside story. Compare the calculation to the rough guess you arrived with, and ask why they differ.
Step 5 — schedule the next run. In Business & Entrepreneurship the inputs drift quietly. Put a reminder a quarter out, re-enter the same fields, and read the change rather than the level. When two sources disagree, it is almost never the arithmetic that differs.
Who actually uses Fund Life — and when
Numbers earn their keep in conversations, and Fund Life is no exception. In Business & Entrepreneurship discussions around Startup Metrics, this figure decides whether an option stays on the table: it converts an opinionated debate into an arithmetic one, and arithmetic is the only referee both sides accept. The input you reach for first is usually the one you measured longest ago.
The audience for this page is people who need one trustworthy number before their next decision. In professional Startup Metrics practice the pattern is always the same — screen with Fund Life, then invest slow analysis only in whatever survives the screen. Numbers are cheap to produce and expensive to retract; the extra minute is the cheapest insurance available.
There is a personal-administration use people overlook: periodic self-checking. Fund Life quietly drifts as life changes — rates move, bodies change, costs compound — and re-running it a few times a year catches drift while correction is still cheap. A result worth acting on survives having its two shakiest inputs halved.
Quick answers: what searchers ask about Fund Life
What affects Fund Life the most?
Fund Life is driven above all by Gross MOIC. Perturbing only that field by ten percent either way produced 1.30 × against the 1.19 × baseline — a ≈9.1 % response, while Management fee manages ≈8.5 %.
Do management fee and gross moic matter equally?
On these inputs, yes: the two measured within a rounding error of each other — ≈9.1 % and ≈8.5 % of the net MOIC to the LP per ten-percent change. Treat them as one pair to verify together rather than ranking them.
What is a typical Fund Life?
On the worked example above Fund Life comes out at 1.19 ×. Treat that as one point on a distribution rather than a norm: the bands, the companion outputs and the sensitivity ranking tell you how wide the plausible range really is.
How do I calculate Fund Life by hand?
Net MOIC ≈ ((commit − fees) × gross − carry on gains) ÷ commit is the entire method. Work the inputs in that order — Fees = $10,475,152 × 2% × 23 = $4,818,570 — and you will reach 1.19 × on the default figures, the same number this tool prints.
What happens to Fund Life if gross moic changes by 10 %?
Try it in the form above and the printed substitution will follow you; the pre-computed answer for the defaults is 1.08 × to 1.30 × across the ten-percent probe, i.e. ≈9.1 % sensitivity on the net MOIC to the LP.
Is the Fund Life result of 1.19 × good or bad?
Neither, on its own — the label “Fees ate most of the venture premium” is the band this figure falls in for the example inputs, and your own inputs will place you elsewhere on the same ladder. Judge the number against your history and your alternatives, and remember that a ten-percent error in Gross MOIC alone moves it by ≈9.1 %.
Should I use Fund Life before launching?
Yes — a Fund Life run on honest inputs before spending is the cheapest consulting an entrepreneur can buy. Re-run at every pricing change; the number moves more often than founders expect.
Can Fund Life be negative or empty?
Yes, and that is informative rather than broken: a negative Fund Life usually means the inputs encode an outflow or a shortfall, and the verdict band above labels exactly that situation instead of hiding it.
Do fees really take that much?
Two percent for ten years on a 2× fund removes roughly a quarter of LP profit — often the single biggest line in the PPM.
What is a fee holiday?
Terms that stop or cut fees after the harvest window; they measurably lift net MOIC for early-exiting funds.
Can this tool see the numbers I type?
It cannot. There is no submission step: the calculation happens in your browser and the result disappears when you close the page. Treat the fields above as a scratchpad rather than a form.
What the labels on this page mean
- Total management fees
- $4,818,570 on the example inputs — a companion figure printed beside the headline of Fund Life so that no result is read in isolation.
- Carry paid to GP
- $1,696,975 in the default Fund Life calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Gross-to-net haircut
- 52.5 % in the default Fund Life calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Net MOIC to the LP
- The primary output of this tool: 1.19 × for the default inputs, computed exactly from Net MOIC ≈ ((commit − fees) × gross − carry on gains) ÷ commit.
- Worked example
- The step-by-step substitution printed above, so the arithmetic can be re-derived by hand or in a spreadsheet.
- Verdict band
- The interpretation attached to a result (“Fees ate most of the venture premium” on these inputs), which turns a bare number into a position on a scale.
- Sensitivity (±10 %)
- How far the Fund Life moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Methodology, sources and limits
Everything above runs on one stated formula, applied without hidden coefficients: Net MOIC ≈ ((commit − fees) × gross − carry on gains) ÷ commit. Source of record: ILPA fee principles; standard 2-and-20 arithmetic. Specialist software layers extra coefficients on top of the same algebra; none are hidden here, and that transparency is what makes a disagreement traceable to a specific input instead of a black box.
Treat the output as a precise answer to the question you typed: exact arithmetic, transparent formula, published source, no hidden rounding. The design constraint was set by usefulness rather than by comfort: an estimate you can interrogate beats an answer you have to trust.
After the number: what to do with it
Re-run the calculation with your own figures, stress the two most sensitive inputs by ±10 %, and only then act on the result.
The audience here is people who need one trustworthy number before their next decision. Everything you need to defend the result — formula, substitution, sensitivity, source — is printed above, so the only remaining variable is the honesty of your inputs.