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Venture capital management fees lowest since 2017 at 1.97% in 2023 

by | Oct 18, 2023

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Today Preqin, the global leader in alternative assets data, tools, and insights, published its annual Private Capital Fund Terms Advisor report. 

The report shows that management fees remained stable for the most recent vintage of 2023 versus 2022, while buyout fees from 2005 to 2023 have averaged 1.91%, compared with 1.90% for 2023/raising vintages.

Venture capital (VC) management fees are slightly lower year-on-year, declining from 2.02% in 2022 to 1.97% in 2023. This is the lowest VC management fees have been since 2017. Meanwhile, direct lending average management fees are 1.73%.


Additionally, Preqin gathered information on over 2,000 funds by filing freedom of information (FOI) requests with public sector investors. By analyzing this data, Preqin analysts determined that actual fees paid are lower than headline fees.

The report draws on Preqin Pro and freedom of information (FOI) data. It also includes data and analysis from Colmore, a Preqin company and an industry leader in services and technology for private market Limited Partners (LPs) and allocators. The combined data offering gives insight into the full spectrum of the fee management universe. 

Recent market conditions benefit LPs’ management fees compared to GPs


As one of the main costs for LPs when investing in private capital, management fees can often determine the relationship between a GP and LP. Market conditions over the past two years have evolved in LPs’ favor. Tighter monetary policy globally means that GPs are now competing for a more limited pool of capital, which strengthens LPs’ position in negotiations. 

Originally, the goal of management fees was to cover operational expenses, while carried interest allowed GPs to profit from their investments’ performance. This dynamic has been shifting, as large fund managers earn more than enough income from management fees alone to cover overhead costs.

According to the Preqin report, for the category of funds raising and 2022/23 vintages, the mean management fee is below 2% in every private asset class. That said, from a private equity strategy perspective, growth capital reached mean fees of 2.05%. At the other end of the scale, the real estate mean management fee for the same category is 1.54%.


RJ Joshua, VP, Head of Private Debt and Fees, Research Insights, at Preqin says“Overall, the picture for fees in private capital is one of relative stability. Private capital faces many challenges in the quarters and years ahead, and we may see increased scrutiny of fees as these barriers to performance increase.”

Additional key findings from the Private Capital Fund Terms Advisor 2023 report include: 

Average management fees:

  • Private debt: Direct lending’s mean management fee had dropped to 1.40% by 2022. Thus far in 2023, fees for direct lending have increased to 1.73%. For distressed funds, the same figure reached 2.00% in 2022, the highest since 2016. The 2023/raising vintage has been 1.84%.
  • Venture capital: While in 2022 a fifth of recent funds charged a management fee above 2.5%, that percentage has fallen to 16.29% in the latest data. Current market conditions in recent quarters have likely led fund managers to cut fees to attract limited capital.
  • Private equity – Growth: Growth equity funds broadly charge a fee between 2% and 2.24%, with 72% of funds doing so. This is 5 percentage points (ppts) above the 2022 level, partially undoing the 10ppts decrease from 2021 to 2022.
  • Infrastructure: In 2022, the largest group of infrastructure funds charged mean management fees of 1.50-1.74%. The latest data suggests that in 2023 this has risen to 2.00-2.25%.

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