Comment by gpjanik

A lot (all?) VCs charge some form of fees (typically capped at 20% of the entire fund, split in various percentages through 4 years investing, 4 divesting period). These fees often are only paid out only based on the actively deployed capital, and are not the only incentive: the main incentive is shares in gains (carry).

The reason they're based on actively deployed capital isn't that the LPs (people who give VCs money to invest) want them to deploy the money in a stupid way, but they definitely don't want VCs to get the fees if the money wasn't invested. Therefore, VCs:

1. Want to raise as much money as possible 2. Want to deploy as much money as possible

Ideally, as quickly as possible.

There's nothing fraudulent about the idea of calculating VCs fees in various scenarios.

There's however the extremely dodgy part of the portfolio companies paying their investor (VC) fees for anything. This is an obvious conflict of interests, and should never happen, but I personally know of multiple VC funds here in Europe (will skip the names to not get sued, lol) who base their entire operational model on funding shitty companies that have 0 chance of success, charging them for the office space and often "shared services" they provide. Unsure if this is a regulatory overlooking, or something that's deliberately legal, but IMHO shouldn't be. Probably they talked their LPs into agreeing to this on paper.