Glossary Term
Carried Interest
Definition
Carried interest, also known as “carry,” is the share of profits earned by general partners (GPs) of a venture capital (VC) or private equity (PE) fund as compensation for managing the fund and generating returns for limited partners (LPs). Typically structured as a percentage of the fund’s profits, carried interest is earned only after the LPs receive their initial investment and a preferred return, often referred to as the "hurdle rate."
Relevance to the MedTech Industry
Carried interest incentivizes GPs to maximize the performance of the funds they manage. In the MedTech industry, where investments are high-risk and involve lengthy product development cycles, carried interest aligns GPs’ efforts with the financial success of innovative medical device companies, encouraging strategic investments in high-potential technologies.