While large VC Funds seem like a lot of money to invest in entrprenuers, the expenses of running a fund over a 10-year life (on average) chip away at the sum persistently. Management fees, legal and accounting expenses, rent and staffing all add up before the fund pays any returns to investors. Gillian and Anne dig into these costs, with examples to show how fund managers run fund expenses. More important, fund managers sometimes elect to optimize their own fees to reduce their individual income tax liability via Management Profits Interest agreements, a practice that federal lawmakers are scrutinizing.

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