A Guide to Sharing Carry

At a Glance

• Carried interest (carry) is the portion of profits a syndicate lead or GP earns after returning investor capital.

• Carry sharing allows leads to allocate part of their carry to collaborators who help source, diligence, or manage deals.

• These arrangements must be structured carefully to avoid compensating someone solely for soliciting investors, which can raise broker-dealer concerns.

• Carry splits are typically documented in writing (for example, through a side letter or carry share agreement) to ensure clarity at the time of a liquidity event.

• Thoughtful carry sharing can strengthen syndicate communities, incentivize contributions, and help emerging managers expand and professionalize their networks.

• Sydecar enables compliant carry sharing through built-in carry share features, making it easy to assign and track carry for your broader management or scout team.

What Is Carried Interest?

Carried interest is the share of a deal’s or fund’s profits that the lead or sponsor receives as compensation for managing the investment.

In a traditional venture structure:

• The sponsor (often the GP or syndicate lead) receives around 20% carry on profits after returning investors’ capital (however, the average carry across SPVs on Sydecar's platform is 12%).

• Carry is only paid once investors have received back their initial investment (1x), and, in some funds, after any preferred return or hurdle.

For SPVs:

• The SPV generally holds a single company.

• Once that investment returns more than 1x, the lead can receive carry from that specific outcome, even if other vehicles have not yet had liquidity.

• If the investment returns less than the contributed capital, there is typically no carry paid to the lead.

This deal-by-deal profile is one reason many emerging managers and syndicate leads prefer SPVs as a way to build track record and participate in upside more frequently than in a traditional fund structure.

What Is Carry Sharing?

Carry sharing is when a deal sponsor allocates a portion of their own carried interest to other individuals who contributed meaningfully to the deal.

Examples of contributions that may warrant carry share include:

• Sourcing a deal (for example, introducing the founder or identifying the opportunity).

• Diligencing the company (for example, providing domain expertise, product feedback, or market analysis).

• Supporting deal execution (for example, helping with negotiation, structure, or operations).

• Post-investment support (for example, helping with hiring, go-to-market, or strategic guidance).

Carry sharing does not change the economics of the SPV or fund from the LPs’ perspective:

• LPs still receive their capital back first, then their share of profits.

• The sponsor’s carry pool is simply split among multiple contributors rather than retained solely by the lead.

How Are Carry Sharing Arrangements Documented?

Carry sharing arrangements are typically documented in writing. Common approaches include:

• Side letters between the sponsor and a contributor.

• Carry share schedules or internal agreements that allocate a percentage of carry for each deal.

• Platform-level functionality (like Sydecar’s carry share feature) that reflects these splits in the admin and payout workflow.

Key elements to document:

• The percentage of the sponsor’s carry allocated to each recipient.

• The deal or vehicle to which the arrangement applies.

• The conditions under which carry is paid (for example, only after investors receive 1x).

• Any vesting or performance conditions, if relevant.

Having these terms clear up front reduces friction at a liquidity event and aligns expectations among contributors.

Why Carry Sharing Is Valuable for Syndicates and Emerging Managers

Carry sharing is particularly impactful in syndicate or community-driven models, where:

• There is a primary deal lead, but

• Multiple people contribute expertise, deal flow, or operational support.

Benefits include:

• Incentivized collaboration: Contributors have a direct economic stake in the outcome.

• Access to deeper expertise: Leads can tap specialized knowledge (e.g., domain experts, functional operators) in exchange for carry.

• Network expansion: Sharing carry can make it easier to bring in co-leads or scouts who open up new founder or LP networks.

• Inclusive participation: In many cases, non-accredited individuals who contribute meaningfully to a deal may receive shared carry, even if they are not investing capital themselves (subject to regulatory considerations).

Done well, carry sharing helps emerging managers scale beyond a single-person operation and build a durable, aligned community around their investing practice.

Regulatory Considerations: Avoiding Broker-Dealer Issues

While carry sharing is a powerful tool, it must be structured with U.S. securities law in mind—particularly rules around broker-dealer activity.

Very broadly:

• A broker-dealer is a person or firm engaged in the business of effecting transactions in securities for the account of others, usually in exchange for transaction-based compensation.

• Transaction-based compensation solely for soliciting investors can be a red flag that someone is acting as an unregistered broker, which is typically not allowed absent proper registration.

For carry sharing in a venture context, practical guidelines include:

• It is generally more defensible to share carry with individuals who actively participate in:

  • Sourcing or originating the investment opportunity.

  • Diligencing or evaluating the deal.

  • Negotiating terms or helping structure the investment.

  • Supporting the company or managing the SPV post-close.

• Compensation that is only tied to “bringing money into the deal” (for example, forwarding a link and collecting a percentage of capital raised) can raise broker-dealer concerns, especially if it is ongoing or repeated across deals.

Because the regulatory environment is nuanced and fact-specific, managers should work with counsel to:

• Define internal criteria for carry eligibility.

• Ensure that contributors receiving carry have substantive involvement beyond capital introduction.

• Avoid marketing carry sharing as a pure “finder's fee” for raising money.

Using Carry Sharing to Grow Your Network Compliantly

With some structure, carry sharing can help emerging managers grow their network while staying aligned with regulatory expectations.

Examples of compliant-forward approaches:

• Deal sourcing + involvement: A community member introduces a founder and then joins diligence calls or helps build the memo.

• Expert diligence: A domain specialist reviews product, market, or technical details and shares their perspective in writing or on calls.

• Operational support: A contributor helps with key hires, strategic intros, or specific growth initiatives after the investment.

• Deal operations and administration: Someone helps set up deal pages, coordinate updates, manage investor communications, and facilitate introductions.

In these cases, carry sharing reflects substantive contributions to the investment process or portfolio support, with capital introductions as a secondary element rather than the sole activity.

How Sydecar Supports Carry Sharing

Sydecar makes it simple and efficient for venture fund and syndicate managers to form SPVs and funds by automating banking, compliance, contracts, and reporting. Within that infrastructure, Sydecar’s carry share capabilities allow you to:

• Assign carry to co-leads, scouts, or specialists directly in the platform.

• Track carry splits at the deal level without manual side-calculations.

• Reflect carry arrangements in documentation and workflows so that, at exit, payouts are clean and transparent.

This helps emerging managers:

• Operationalize a scout or co-lead program.

• Avoid spreadsheet-based carry tracking.

• Maintain clearer records for their admin, tax, and legal partners.

Key Takeaways for Emerging Managers

When designing a carry sharing strategy:

1. Start with your objectives. Use carry to reward and retain people who materially improve your deal flow, diligence, and portfolio support.

2. Document clearly. Put carry splits and conditions in writing and keep records aligned with your admin and tax processes.

3. Be mindful of broker-dealer rules. Avoid compensating people solely for raising capital, especially in a repeated or systematic way.

4. Use the right infrastructure. Platforms like Sydecar that natively support carry share make it easier to scale these arrangements without losing track.

5. Get advice. For edge cases and recurring programs (like scouts or co-leads), work with counsel to design a framework that fits your strategy and risk tolerance.

Thoughtfully executed, carry sharing can be a cornerstone of a modern syndicate or emerging manager platform; one that aligns incentives, deepens community, and supports better outcomes for founders and LPs.