[jgervin]

I might be wrong, but VC's are only friends to those contribute to the fund. So say the VC gets a $1 billion dollar fund, they take there 20% commission to run the fund (fly around, acquire space, etc...) then they go out looking for the biggest risk with the biggest return. They are making a killer salary with the 20% commission to run the fund. They don't have any friends at that point.... at least that is what I have come to learn.

[sokoloff]

As I understand it, their "commission" is closer to 2%, not 20%. The 20% figure you're thinking of is the carry (think a VC-imposed capital gains tax on profits). So, a dollar invested gets the VC 2 cents. A dollar of net profit gets the VC 20 cents.

[brudgers]

>"VC's are only friends to those contribute to the fund"

No, those are business relationships too. I know that in real-estate deals when the development entity needs to raise more money from the partners, those who cannot do so will find themselves "unfriended." In fact, it is not uncommon for raising additional funds to be used as a tool for increasing returns for remaining partners in that environment. I suspect that if VC's never do so, it is because of contractual obligations not a the kindness of their hearts.

[damoncali]

You are, indeed, wrong. 2% is a normal management fee, which is a nice, but hardly "killer" salary. That 20% is after the LP's get their return, and could very well be zero. VC's only get rich when things go very well.