Instruments
Syndicate carry
Also called Carried interest, Carry
The share of an investment's profit — conventionally 10% to 20% — paid to the person who sourced, diligenced and led the deal, in exchange for letting others invest alongside them.
In plain English
Carry is the compensation model of the entire venture industry, scaled down to a single deal. A lead finds an opportunity, negotiates terms, takes an allocation and offers the rest to a group. If the investment makes money, the lead keeps a percentage of the gain. If it does not, the lead earns nothing and loses their own capital alongside yours.
The number itself sits between 10% and 20% in almost all angel syndicates, with 20% the norm on platforms and 10% to 15% common in informal groups. What varies more than the headline is the base it applies to: profit after fees or before them, per deal or across a portfolio, with or without a hurdle rate that must be cleared before carry starts.
Per-deal carry has a structural quirk worth understanding. In a fund, gains and losses are netted before carry is calculated, so the manager earns only on the portfolio's net result. In a deal-by-deal syndicate, the lead earns carry on every winner while bearing no offset for the losers. Back ten deals from the same lead where one returns 10× and nine go to zero, and the lead earns carry on the winner while your portfolio is roughly flat.
That asymmetry is not a scandal — it is the well-understood price of unbundled access — but it should shape how you evaluate a lead. Their incentive is to do more deals; yours is to do better ones.
What it means for your cheque
Carry is worth paying when the lead brings something you cannot: proprietary access, sector expertise you lack, or diligence you could not perform. It is not worth paying when the lead is forwarding a deal that reached them the same way it reached you.
The practical test is whether the lead is investing meaningful personal money on the same terms. A lead with $50,000 of their own in a deal has read the documents. A lead with $2,000 and 20% carry across forty deals a year is running a volume business, and you are the volume.
Do the arithmetic
Per-deal carry across a ten-investment portfolio
You back ten deals from one lead, $5,000 each, $50,000 total, at 20% carry per deal. Nine go to zero. One returns 12×.
| Total invested | $50,000 |
|---|---|
| Proceeds from nine failures | $0 |
| Proceeds from the winner at 12× | $60,000 |
| Gross profit on the winner | $55,000 |
| Carry paid to the lead | $11,000 |
| Your net proceeds | $49,000 |
| Your net result on $50,000 invested | a $1,000 loss |
| The lead's earnings | $11,000, plus their own return |
You were down slightly and the lead was paid $11,000. Netting the losses first — as a fund would — would have meant no carry at all. This is the single most important thing to understand about deal-by-deal syndication.
At the table
What to negotiate
- Ask whether carry is calculated per deal or netted across the syndicate. Netted is rare and much better for you.
- Ask whether there is a hurdle. Even a modest one changes the lead's incentives toward quality.
- Confirm carry is charged on profit, not on proceeds. This should be obvious and is occasionally not.
- Ask how much the lead is personally investing, in cash, on identical terms.
- Ask to see the lead's prior deals — not the winners, the full list.
Syndicate carry: common questions
Is 20% carry too much for an angel syndicate?
When is carry actually paid?
Can I invest alongside a lead without paying carry?
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