Hurdle Rate

Term Main definition
Hurdle Rate
The minimum preferred rate of return to limited partners in a venture capital fund (organized as a limited partnership) to be achieved (after the return of limited partner invested capital) before the general partner's (or fund manager's) carried interest kicks in. A hurdle rate of 1096 means that the venture capital fund must achieve a return of at least 10% per annum on invested assets (for its limited partners) before the remaining profits or gains are shared (with the general partner) according to the carried interest arrangement. Also sometimes referred to as the preferred return