# Carried Interest

*Startups & Venture Capital — Finicade finance glossary*

Carried interest is the share of profits a fund manager keeps, conventionally 20% above a hurdle. It's the main source of wealth in venture and private equity, and its tax treatment as capital gain rather than income is one of the longest-running arguments in tax policy. Because carry only pays above a hurdle, a mediocre fund earns its managers management fees and nothing else.

**Also known as:** carry, 2 and 20, performance allocation

**Related terms:** [General Partner](https://finicade.com/glossary/general-partner), [Limited Partner](https://finicade.com/glossary/limited-partner), [Hurdle Rate](https://finicade.com/glossary/hurdle-rate), [Private Equity](https://finicade.com/glossary/private-equity), [Management Fee](https://finicade.com/glossary/management-fee)

Source: https://finicade.com/glossary/carried-interest