More management fee step-downs

May 20

Data Insights


Management fee step-down provisions are showing up more in Limited Partnership Agreements (LPAs), the contractual agreements between fund managers and investors, according to data from Aumni-tracked venture deals.

Generally speaking, mean and median initial management fees in LPAs have hovered around 2.4% over the last five years, with mild increases since 2021. While management fees have remained more or less constant, the prevalence of management fee step-down provisions increased to 88.5% in 2023. The effect of higher management fee step-downs could potentially be a reduction in cash flow for funds from fees.

A management fee step-down can be accomplished by reducing the fee percentage, the fee base, or both.

See more in the Aumni Venture Beacon Year End 2023 Report. Want to be the first to get these insights? Scroll down to sign up for our Venture Insights newsletter.

Photo by Kristaps Ungers