A venture capital fund is a pooled investment vehicle that raises capital from institutional and individual investors to invest in early-stage, high-growth companies in exchange for equity — typically with a 10-year fund life.
At CRAGSI, we define a venture capital (VC) fund as a pooled investment vehicle — typically structured as a limited partnership — that raises capital from institutional and individual investors to invest in early-stage, high-growth companies in exchange for equity. VC funds typically have a 10-year life, with a 3–5 year investment period followed by a harvesting period during which investments are sold or taken public.
VC fund economics are driven by the "2 and 20" model: the general partner charges a 2% annual management fee and retains 20% of profits (carried interest) above a preferred return hurdle. This structure creates incentives to maximize portfolio value — but also creates tensions when portfolio companies are distressed, because managing workouts and restructurings is time-consuming relative to expected recovery in many scenarios.
From CRAGSI's perspective, VC funds are one of our most important client constituencies. A fund with multiple distressed portfolio companies is managing a portfolio of special situations — and each company represents either recoverable value or an unnecessary write-off. CRAGSI's ability to triage a distressed portfolio, identify viable recovery paths, and execute turnarounds or structured sales creates direct value for the fund and its limited partners.
Related CRAGSI services: Turnarounds & Restructurings · Valuations · Exit Event Strategies