That's really amazing! Some VC management fees have reached 20%.

Domestic VCs have entered an era of charging management fees based on actual capital contributions. This conclusion is drawn from a due - diligence survey of 172 newly established funds by the China Venture Capital Research Institute.

Data shows that among funds established before 2024, only a minority charged management fees based on actual capital contributions. However, after 2024, over 70% of funds charge management fees based on actual capital contributions. This means that if a fund calls capital in three installments, compared with the previous model of charging based on committed capital, the management fee collected in the first installment has been reduced to one - third of the original amount.

We compared the survey data with that of the US market. We found that although the management fee rates are not significantly different, the difference in the calculation base, whether based on committed capital or actual capital contributions, is becoming increasingly obvious.

It is worth mentioning that in the comparison, we also found that there are a number of venture capital funds in the European and American markets with management fees exceeding 10%. Although they are not mainstream institutions, they reflect the diverse attempts in the overseas market. One institution even charges a management fee as high as 20%, which is surprising even in the overseas market.

01. There is actually a US VC charging a 20% management fee

Before discussing the domestic survey data, let's first take a look at the situation overseas.

The above - mentioned "peculiar" US counterpart is Banyan Capital, founded in 2023. Its founder (also the only GP) is Sam Awrabi, a consulting expert in the field of artificial intelligence.

His personal profile is posted on the official website of the institution: Sam Awrabi once worked at MissingLink.ai, a subsidiary of Samsung, and then joined Comet ML. It is said that he was a key figure in the revenue growth of both companies. Especially during his tenure at Comet ML, he led the company's key growth from the seed stage to the Series B financing, helping the company acquire more than 150 technology giants such as Uber and Netflix as customers.

After leaving Comet ML, Sam founded Awrabi Consulting. His consulting clients include cutting - edge AI startups such as Deci, ClearML, Layer, Deepnote, Activeloop, and Ori. During this period, he achieved remarkable results - helping 54% of his clients successfully complete Series A financing and 18% of the companies enter the Series B financing stage. In particular, his in - depth involvement in Deci.ai, which was acquired by NVIDIA, became a landmark case in the industry.

With the above successful cases, he was well - prepared to enter the venture capital industry. So in 2023, Sam Awrabi founded the Banyan venture capital fund, which specializes in investing in artificial - intelligence - native projects at the seed and pre - seed stages.

According to PitchBook data, the fund he manages, Banyan Venture (also the only fund), has a scale of $10 million and a duration of 10 years, with an investment period of 3 years. Banyan, as the general partner, contributes 1%, which is $100,000.

The most crucial thing is: the fund charges a 20% management fee.

This charging rate is not only astonishing in the domestic market but also quite "alternative" in the overseas market. PitchBook data shows that the average management fee of overseas funds (not just US funds) has remained between 1.5% and 2% since 2016. They have collected management fee data of 151,335 funds, among which only 190 have a management fee exceeding 2%. If ranked by the management fee charging standard, Banyan Venture ranks third.

However, even with such a high fee, there are still LPs supporting it. Although we have not investigated which individuals or institutions are the LPs behind it, there is such a sentence in the fund's introduction -

"The GP can only share 20% of the excess return after the fund reaches a 100% return threshold."

This means that to gain the trust of LPs, Banyan has made significant adjustments to the excess return sharing. Only when the DPI is greater than 2 can it share the excess return (it is not clear in the statement whether the Hurdle is an annualized rate. If it is an annualized 100%, this value will be even higher).

Moreover, we found that Banyan is not the only venture capital fund charging an extremely high management fee.

A fund named Radix Ventures also charges a management fee as high as 16.5%. It is said that this fund is headquartered in Warsaw, Poland, with a scale of 41 million euros. It mainly invests in technology companies in Central and Eastern Europe, and its LPs include institutions such as the European Investment Fund (EIF). There are also some SPV funds (investing in a form similar to domestic special - purpose funds) that charge a 10% management fee and are dedicated to helping LPs invest in popular AI startup projects in Silicon Valley.

Of course, the above - mentioned funds are all relatively small in scale. And it is very likely that the management fees are charged at a one - time rate of 20%. However, different charging standards at least indicate that the model innovation in the overseas venture capital field is still ongoing.

02. Charging management fees based on actual capital contributions has become the mainstream in China

In contrast, the management fee model of domestic funds is also undergoing significant changes.

From 2024 to the present, the China Venture Capital Research Institute has conducted due - diligence on 172 newly established funds and studied their management fee calculation methods.

The conclusion is that in terms of management fee rates, the charging ratios of VCs in China and the US are not significantly different. However, in terms of the calculation base, there is a divergence between VCs in the two countries.

Let's first look at the management fee rates of domestic VCs.

Among the 172 funds we surveyed, 144 funds still have a management fee of 2%, accounting for 83.72%.

This data is basically on par with the US market (see the figure below). In 2024, the average management fee rate of VCs in the US market was 1.94% of the committed capital, and in 2025, it was 1.75%. So in terms of management fee rates, the difference between China and the US is small.

However, looking at the fee rate without considering the base actually doesn't make much sense.

The real significant difference between China and the US lies in the charging base, that is, whether the fund charges management fees based on committed capital or actual capital contributions.

In the US market, managers usually charge management fees based on the committed capital. But among the 172 funds we surveyed, only 35 funds charge management fees based on the committed capital during the investment period, accounting for 20.35%; 133 funds charge management fees based on actual capital contributions, accounting for 77.33%.

So overall, charging management fees based on actual capital contributions has become the mainstream in the industry.

What's more obvious is the trend change. According to the "Han Kun 2022 - 2023 Annual Fund Raising Project Data Analysis Report" previously released by Han Kun Law Offices, in 2020, the proportion of domestic funds charging management fees based on actual capital contributions during the investment period was only 17.86%. From 2022 to 2023, the proportion of funds choosing to charge based on actual capital contributions was only 19.47%. This forms a sharp contrast with the funds established in 2024 in our current survey.

Even though there are differences in the survey samples between the Han Kun team and our team, it at least reflects a real and clear industry change: Before 2024, only a minority of funds charged management fees based on actual capital contributions; however, after 2024, the majority of funds charge based on actual capital contributions.

Assuming that the initial payment of a fund is 30% of the committed capital, this small difference in wording reduces the early - stage management fee to one - third of the original amount. This will undoubtedly cause great continuous - operation pressure on some early - stage and angel investment institutions with small fund scales and a large number of investment projects.

03. "Management fees will mainly decline in the next two or three years"

After charging management fees based on actual capital contributions has become the industry mainstream, is there still room for the management fees to decline?

In June this year, the Guangdong Provincial Department of Finance issued the "Administrative Measures for Government - invested Funds in Guangdong Province". It mentioned that "the management fee of a fund should generally be calculated based on the actual capital contributions or actual investment amounts, and a reasonable calculation standard should be determined. The management fee of the fund should be paid from the fund's income or interest. In principle, it is not allowed to be paid from the principal. If the fund has not generated any income or interest for the time being, it can be prepaid from the principal first and then replenished after the fund generates income or interest."

Although this regulation applies to "government - invested funds" rather than sub - funds, we can still glimpse the long - term orientation of the industry towards management fees. As many interviewees have told us, "Management fees will mainly decline in the next two or three years."

Moreover, according to the above - mentioned regulations, management fees cannot be paid from the principal and can only be paid after the fund generates income. This means that according to these regulations, funds with a DPI of less than 1 will not be able to collect management fees (or will have to refund the collected fees).

What does this mean?

The "2024 China Venture Capital Private Equity Fund Performance Benchmark" released by the China Venture Capital Research Institute in June 2025 shows that for funds established in 2017, the DPI of the upper quartile is exactly 1. That is to say, getting the principal back in 7 years can be considered "excellent". If we apply Article 23 of the "Administrative Measures" in Guangdong, only the top 25% of funds in the country may be able to collect management fees within 7 years.

In addition, the Guangdong document states that "the management fee should generally be calculated based on the actual capital contributions or actual investment amounts". So will the "actual investment amount" become the charging standard?

This is also a concern of some state - owned LPs in our recent surveys: "Can we charge fees in a floating manner like public funds or deduct fees based on the project investment amount?" Most of them raise this question due to audit concerns. "We have invested in a fund, but the fund has not invested in a single project for more than a year, and the state - owned funds are lying idle and being wasted. We have to explain to the auditors why the management fees are still being collected when the funds have been idle for more than a year."

Not surprisingly, this proposal has been opposed by most managers.

An investor analyzed, "For a committed capital of one billion yuan, we need to allocate personnel and search for projects according to the scale of one billion yuan. If we calculate based on the actual capital contribution of 30%, the annual management fee of 6 million yuan simply cannot support the team configuration for a one - billion - yuan fund. But even so, we have accepted charging based on actual capital contributions. If the fee is further reduced, it will cut into the basic operating costs, and we definitely can't do it."

In short, charging management fees based on actual capital contributions is already the bottom line of the industry and there is no more room for reduction.

On one hand, there are the regulatory requirements of state - owned LPs, and on the other hand, there are the survival dilemmas of VCs/PEs. The reduction of management fees at least reflects three contradictions between LPs and GPs: cost and return; trust and transparency; policy orientation and market rules.

On one hand, the state encourages "investing in early - stage, small - scale, and technology - based projects". However, early - stage funds have limited scales, a large number of projects, and high management difficulties. Coupled with the pressure from the external exit environment, if the management fees continue to decline, many teams that are already struggling to survive may not be able to sustain, and the policy orientation may also fail.

On the other hand, the trust gap is also prominent. Many funds continue to collect management fees without making any investments for a long time, which makes it difficult for state - owned LPs to explain to the auditors and weakens their trust in GPs. Among the approximately 12,000 registered fund managers with the Asset Management Association of China, there are indeed a large number of institutions relying on management fees to survive, and they will be eliminated under the trend of charging based on actual capital contributions. According to the data we have, 2023 and 2024 were both big years for the cancellation of private - fund managers. In 2023, for example, the Asset Management Association of China cancelled a total of 2,539 managers, and all of these 2,539 institutions were non - state - owned.

Of course, it should be emphasized that if management fees are reduced across the board, it may force truly dedicated early - stage and technology - focused managers to withdraw, which will deviate from the original intention of the policy to promote technological innovation.

So is there a model that can coordinate the interests of both parties?

We have observed that some institutions have proposed a plan to "reduce management fees in exchange for a higher carry" to strengthen the alignment of interests between LPs and GPs. GPs will not receive any income when the fund has no returns, and only when the fund truly creates value can GPs share a larger proportion of the excess return (for example, as I know, some institutions propose to collect management fees only after the annualized return exceeds 10%).

Although this model may not be suitable for all early - stage institutions, it at least shows that the market is trying to find a new balance: one that can address the concerns of state - owned LPs about cost, efficiency, and compliance, while maintaining the long - term incentive mechanism for GPs.

Since the US market can have the attempt of a 20% management fee, the domestic market may as well have more innovations.

This article is from the WeChat official account "Beyond the J Curve", author: Yang Boyu. Republished by 36Kr with permission.