Yeah, I guess something like that.

Other approach is for LPs to reject any percentage based management fees.

I think a skin in the game payout structure for VCs would be better.

- VC has to commit x% (5%)? of their net worth into the fund

- VC gets bonus payouts only on individual investments that are net profitable (something like 3% of the net profit from the invested LP money)

- Could also be augmented with a Flat Yearly Salary/Fee to cover basic operations (not a percentage based fee)

If I was an LP thats how I would do it. No way would I agree to a flat percentage mangement fee.