2

Venture Capital / Assignments by Rahmati

Name: Rahmatullah Rahmati
ID NO: 13596
Assignment: Chapter 2 & 3 exercises
2.1 Suppose that a $200M VC fund has a management fee of 2.5 percent per year for the first five years,
with a reduction of 0.25 percent (25 basis points) in each year thereafter. All fees are paid on committed
capital, and the fund has a ten-year life. What are the lifetime fees and investment capital for this fund?

Venture Capital-Problem 2.1

Calculations
Ye
ar
1
2
3
4
5
6
7
8
9
10

Base
Amount
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00
$
200,000,000.
00

Fee
Percentag
e

Annual Fees

$
2.50% 5,000,000.00
$
2.50% 5,000,000.00
$
2.50% 5,000,000.00
$
2.50% 5,000,000.00
$
2.50% 5,000,000.00
$
2.2500% 4,500,000.00
$
2.0000% 4,000,000.00
$
1.7500% 3,500,000.00
$
1.5000% 3,000,000.00
$
1.2500% 2,500,000.00
$
42,500,000.0
Total Fees
0
Total VC
$

American University of Afghanistan/ Spring 2016 Venture Capital Class

Venture Capital / Assignments by Rahmati

Fund
Total
Invested

200,000,000.
00
$
157,500,000.
00

According to my above (Table) Calculations, The followings are the result:

1. Life time fee for 10 years = 42,500,000 USD
2. Invested Capital
= 157,500,000 USD

2.2: suppose that a $ 1B VC fund has fees of 2.0 percent per year in all years,
with these fees paid on committed capital in the first five year and on net
invested capital for year 6 through 10. You can assume the fund is fully
invested by the beginning of year 6, then realizes 20 percent of its
investment capital in each of the following five years. What the lifetime fees
and investment capital for this fund?

3.1 The Bigco pension plan invested in dozens of VC funds. The director of pension
plan is preparing his annual report the Bigco board of directors. Summary
information for Bigcos VC portfolio is given in exhibit 3.9

American University of Afghanistan/ Spring 2016 Venture Capital Class