MAXIMIZING THE IMPACT
Transforming the Conventional Profit Sharing Model
Achieving Returns for LPs, Delivering Impact
Giving back to Miami University is a pillar of 1809 Capital's objectives and sets us apart from the typical venture fund. At 1809, we prioritize financial returns while harnessing the strength of the Miami alumni network and supporting the students at the institution we care about. Fund strategy accesses top tier investment opportunities while fostering the development of outstanding entrepreneurs.
How the Traditional Profit-Sharing Model Works:
General Partners (GPs) receive a carried interest (a portion of the profits) in return for their contributions. Typically, these profits are divided with an 80/20 split, where 80% goes to LPs, and the remaining 20% is allocated to the GPs.
1. 100% of cash inflows go to the LPs until the cumulative distributions match the initial invested capital.
2. From then on, any cash flows over the distributions made in the step above are considered profits. Profits are then distributed 80% to the LPS. The remaining 20% goes to the GPs. This is commonly referred to as the "80/20 spilt".
How the 1809 Capital Profit-Sharing Model Works:
Our GPs receive a carried interest (a share of profit) in return for their contributions after the Miami University Foundation does. Profits at 1809 are split 80/12/8, with 80% allocated for LPS, 12% for the Miami University Foundation, and 8% for GPs.
1. When there is a cash inflow, it goes to the LPs until the cumulative distributions equal the original capital invested.
2. Thereafter, cash flows that are made in excess of the distributions indicated by the step above are considered profits. 80% goes to LPs, 12% going to the Miami University Foundation and 8% remains for the GPs.
The Investment Committee will Allocate the Majority of GP Carried Interest to Support Miami Programs.
The majority of General Partner Profit/Carried Interest Donated to the Miami University Foundation
In the 1809 Capital model, we continue to see returns and return the same amount of profit to our LPs as in the traditional model.
By sharing a portion of our General Partners' profits and partnering with LPs who are members of the Alumni Network, we provide strategic support to Miami's mission and a robust resource platform for students, faculty and alumni pursuing innovation endeavors. We believe our investment, and engagement of the LP and VC Network, will contribute to the emergence of new Miami related start-up projects and entrepreneurs.