Where the 2/20% Venture Capital Structure Comes from

Again, I just want to get this out there. Venture capital, other private equity and alternative asset classes often get paid in the following way: x% of the total money they are investing plus Y% of the returns they generate above some hurdle. Classic case is 2/20. 

There are a many stories where this comes from: whale hunting, spice trading and other stuff. According to a fascinating book I want to recommend More money than God this is not actually true but what dreamed up by the first Hedge Fund guy. This is fascinating to me because the whaling and other stories are told soo often and apparently it is bullshit.

Venture Capital Compensation