[vm]

No, Kauffman simply said returns were lower for big funds and generally higher for small funds. But it doesn't really matter - most funds actually pay management fees back to LPs before they're allowed to generate carried interest.

For example, if a fund earns $10M in management fees, it would pay back that $10M from the first returns generated by the fund. Then, only after getting "breaking even," would the partners earn carried interest. If the fund doesn't hit that watermark, it loses money for investors.

There are exceptions, though most of the industry has moved this way.

For those who haven't read the report, it's here: http://www.kauffman.org/uploadedFiles/vc-enemy-is-us-report....

Personally, I don't put much weight into it. It's conclusions are heavily skewed by the decade after 2000, which destroyed returns for most investing asset classes. (Despite the report's claims that it covers "20 years" of funds, most charts and examples, esp about mega funds, are recent).

[tptacek]

Thanks. I had been reading political crud about PE firms and re-skimmed the Kauffman thing looking for confirmation.