Here's a complete worked example so you know exactly what to expect.
Deal terms
Investment: $10,000
Setup fee: 6%
Carry: 20%
Deal exit: 3x return
Step 1 — At investment (Day 1)
You wire $10,600 ($10,000 investment + $600 setup fee).
Or: you wire $10,000, and the setup fee is deducted (you get $9,400 worth of shares) - check your subscription agreement for which method applies.
Step 2 — During holding period (years 1–5)
No additional fees.
You receive quarterly updates and annual K-1 tax forms.
Your portfolio shows the estimated current value.
Step 3 — At exit (Year 5, 3x return)
Your shares are worth $30,000 (3 × $10,000)
Profit = $30,000 − $10,000 = $20,000
Carry = $20,000 × 20% = $4,000
You receive = $30,000 − $4,000 = $26,000
Total fees paid
Setup fee: $600 (at investment)
Carry: $4,000 (at exit, from profits only)
Total: $4,600 on a $15,400 net gain
What if the deal loses money?
If the exit returns less than your original investment (e.g., 0.5x = $5,000), you pay zero carry. You only paid the $600 setup fee. Your total loss would be $5,600 ($10,600 invested - $5,000 returned)