{"id":3771,"date":"2026-09-19T00:07:50","date_gmt":"2026-09-18T15:07:50","guid":{"rendered":"https:\/\/slowsteps.com\/?p=3771"},"modified":"2026-09-20T22:59:13","modified_gmt":"2026-09-20T13:59:13","slug":"why-waterfalls-exist","status":"publish","type":"post","link":"https:\/\/slowsteps.com\/en\/podcast\/why-waterfalls-exist\/","title":{"rendered":"Episode 9:  Why Waterfalls Exist"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>&#8211; Fifty Years of Negotiation Between GPs and LPs<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This article is based on a <a href=\"https:\/\/spotifycreators-web.app.link\/e\/2msEhwuwx6b\" target=\"_blank\" rel=\"noopener\">Podcast<\/a> and <a href=\"https:\/\/youtu.be\/i8kJIMZctiY\" target=\"_blank\" rel=\"noopener\">YouTube<\/a> episode of the same title.<\/p>\n\n\n\n<div class=\"wp-block-bogo-language-switcher\"><ul class=\"bogo-language-switcher list-view\"><li class=\"en-US en current first\"><span class=\"bogoflags bogoflags-us\"><\/span> <span class=\"bogo-language-name\"><a rel=\"alternate\" hreflang=\"en-US\" href=\"https:\/\/slowsteps.com\/en\/wp-json\/wp\/v2\/posts\/3771\/\" title=\"English\" class=\"current\" aria-current=\"page\">English<\/a><\/span><\/li>\n<li class=\"ja last\"><span class=\"bogoflags bogoflags-jp\"><\/span> <span class=\"bogo-language-name\"><a rel=\"alternate\" hreflang=\"ja\" href=\"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/posts\/3771\/\" title=\"Japanese\">\u65e5\u672c\u8a9e<\/a><\/span><\/li>\n<\/ul><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Greetings from Dar es Salaam.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When I started this Podcast series earlier this year, I was writing from Abidjan in C\u00f4te d&#8217;Ivoire. This time, I am writing from Dar es Salaam, Tanzania.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When people think about private equity or venture capital, discussions usually revolve around investments, exits and markets.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yet when you strip away the complexity, a fund does something remarkably simple.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Raise capital from investors.<\/li>\n\n\n\n<li>Invest the capital.<\/li>\n\n\n\n<li>Realize investments.<\/li>\n\n\n\n<li>Return the money.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">That is all.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The interesting part begins at the very last step.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Returning capital is easy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The difficult question is:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>How should the profits be shared?<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">And that is where waterfalls begin.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=1024%2C559&#038;ssl=1\" alt=\"\u66f8\u985e\u306e\u4e0a\u306b\u7f6e\u304b\u308c\u305f\u30c1\u30a7\u30b9\u306e\u99d2\u3068\u30b5\u30a4\u30f3\u3092\u884c\u3046\u624b\u306e\u30af\u30ed\u30fc\u30ba\u30a2\u30c3\u30d7\u3002\u80cc\u666f\u306b\u306f\u56f3\u66f8\u9928\u306e\u672c\u68da\u304c\u898b\u3048\u308b\u3002\" class=\"wp-image-3768\" srcset=\"https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=1024%2C559&amp;ssl=1 1024w, https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=300%2C164&amp;ssl=1 300w, https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=768%2C419&amp;ssl=1 768w, https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=1536%2C838&amp;ssl=1 1536w, https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=2048%2C1117&amp;ssl=1 2048w, https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?resize=1320%2C720&amp;ssl=1 1320w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<!--more-->\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">A Waterfall Is Not Really About Water<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The word &#8220;waterfall&#8221; naturally brings a waterfall to mind.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The name comes from the idea that proceeds flow through a sequence of distribution steps.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Who gets paid first?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Who gets paid next?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Who receives profits, and under what conditions?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The money moves through a series of layers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That is why the concept is called a waterfall.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Why Did Waterfalls Become So Complicated?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">What many people forget is that today&#8217;s waterfalls were not designed all at once.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The structures we see today are the result of decades of negotiation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">From what I have heard over the years, carried interest was far less common before the 1980s.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Managers typically earned a fixed fee.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If investments performed well, the economics did not change dramatically.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Eventually a new question emerged:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">Should managers who create exceptional returns participate in those returns?<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The answer increasingly became &#8220;yes.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But that immediately created a second question:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">How much is fair?<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">And that question has been debated ever since.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The modern waterfall is not a mathematical formula.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is the accumulated outcome of roughly fifty years of negotiation between capital providers and investment managers.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Deal-by-Deal or Whole Fund\u304b<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">One of the classic debates appears here.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Imagine a fund that makes ten investments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Five are highly successful.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Five lose money.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Under a Deal-by-Deal model, the GP may receive carried interest from successful investments even before the entire portfolio is realized.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">From the GP&#8217;s perspective, this is attractive.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The manager creates value and wants that success recognized quickly.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But from the LP&#8217;s perspective, another question appears:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>What happened to the five unsuccessful investments?<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The LP naturally argues:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Look at the entire fund.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The GP says:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Successful investments should be rewarded.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Both positions are understandable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That is why hybrid structures such as Adjusted Deal-by-Deal waterfalls emerged.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is where an important realization appears.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>A waterfall is not a profit allocation formula.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>A waterfall is an incentive design mechanism.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Its purpose is not simply to divide money.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Its purpose is to align the interests of GPs and LPs.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">What Is a Hurdle Rate?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Another major debate centers around the hurdle rate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In private markets, an 8% hurdle rate is common.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For many years, I found myself asking a simple question:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Why 8%?<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Of course, the easy answer is market convention.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But if we look deeper, the discussion becomes more interesting.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Between the capital call and the distribution, the GP is using the LP&#8217;s capital.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another way of saying this is:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>The GP is effectively using capital provided by the LP.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Viewed from that angle, the hurdle rate becomes something more than a minimum return threshold.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It becomes a discussion about:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>How should we value the opportunity cost of that capital?<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The number itself is less important than the reasoning behind it.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Is 0% Really Fair?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This is where opinions tend to diverge.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And honestly, they should.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Different asset classes justify different economics.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Venture capital is not infrastructure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Infrastructure is not real estate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Real estate is not buyout private equity.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yet I have always paused whenever I see a 0% hurdle rate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We live in a world where investors have alternatives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Government bonds exist.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investment-grade debt exists.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Public equities exist.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Index investing exists.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All of them carry expected returns.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So when a fund effectively says:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Entrust your capital to us for ten years, but the minimum expected return is zero<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">I cannot help but wonder whether that is really the appropriate starting point.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The important issue is not whether the hurdle rate should be 0%, 6% or 8%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The important issue is whether the chosen number can be justified economically.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In many ways, this is less a hurdle rate discussion and more an investor communication discussion.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Why the Calculations Become So Painful<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">One reason many people dislike hurdle rates is practical.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The calculations become complicated.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Capital calls occur at different times.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Distributions occur at different times.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Partial distributions occur.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Compounding enters the picture.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At first glance many people assume everything should offset itself.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Unfortunately, it does not.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Interest components often continue compounding in unexpected ways.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I was recently reviewing a real-world example that reminded me of this very problem.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The intuition said one thing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The mathematics said something else.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That is why waterfalls can be so frustrating.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And it is also one reason fund administrators exist.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sometimes financial logic must be tested through actual calculations rather than intuition.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Template LPAs Are Not the Answer<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In Japan, template LPAs are sometimes treated as if they were the correct answer.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I do not see them that way.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Template LPAs are not answers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They are historical records.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Deal-by-Deal.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Whole Fund.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Hurdle Rates.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Catch-Up provisions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Carried Interest.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">None of these terms appeared by accident.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Each provision reflects an argument that occurred somewhere in the past.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Each reflects a different view of what fairness looks like.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That is why the most important thing to read is not the clause itself.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is the reasoning behind the clause.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">What Are We Really Arguing About?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">When people discuss waterfalls, they often think they are discussing calculations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I do not think that is true.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The real discussion is:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>What is fair between GPs and LPs?<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Every major waterfall provision is ultimately a different answer to that question.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Deal-by-Deal and Whole Fund represent different views of performance recognition.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Hurdle Rates represent different views of capital costs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Catch-Up provisions represent different views of economic sharing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The formulas are merely the final expression of those beliefs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Waterfalls are not profit allocation rules.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They are incentive architectures.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And private funds do not exist in isolation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Investors compare funds against government bonds.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Against public equities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Against real estate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Against other private funds.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That means carried interest, hurdle rates and waterfalls cannot be evaluated solely from inside the fund structure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They must be evaluated against the broader investment opportunity set available to investors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A waterfall only becomes meaningful when its economics can be explained as reasonable and fair.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For me, that is the most interesting part of the discussion.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And the story does not end here.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If this episode is about:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Fairness between GPs and LPs<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">then the next topic, Equalisation, is about:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Fairness among LPs themselves.<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Perhaps that is what makes fund structures so fascinating.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the end, they are not only arrangements for investing capital.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They are systems for designing fairness.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Waterfalls are often described as distribution mechanics, yet their real purpose is something deeper. They are incentive architectures designed to balance the interests of GPs and LPs. This article explores the history and logic behind the structures we see today.<\/p>\n","protected":false},"author":94403148,"featured_media":3768,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"advanced_seo_description":"A waterfall is not just a distribution formula.\n\nIt is the accumulated result of decades of negotiation between capital providers and fund managers.\n\nDeal-by-Deal.\nWhole Fund.\nHurdle Rates.\nCarry.\n\nEach provision answers a different question:\n\nWhat is fair?","jetpack_seo_html_title":"Why Waterfalls Exist: Fifty Years of Negotiation Between GPs and LPs","jetpack_seo_noindex":false,"jetpack_seo_schema_type":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_locale":"en_US","_original_post":"https:\/\/slowsteps.com\/?p=3764","_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_hide_featured_image":false,"_jetpack_featured_image_duplicate_dismissed":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"{title}\nJust released a new episode on Podcast:\n{excerpt}\n\n{url}","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":true,"token":"eyJpbWciOiJodHRwczpcL1wvc2xvd3N0ZXBzLmNvbVwvd3AtY29udGVudFwvdXBsb2Fkc1wvMjAyNlwvMDlcL0dlbWluaV9HZW5lcmF0ZWRfSW1hZ2VfajhvN3pzajhvN3pzajhvNy0xMDI0eDU1OS5qcGVnIiwidHh0IjoiRXBpc29kZSA5OiAgV2h5IFdhdGVyZmFsbHMgRXhpc3QiLCJ0ZW1wbGF0ZSI6ImhpZ2h3YXkiLCJmb250IjoiIiwiYmxvZ19pZCI6MjM4NDQ4MDU0fQ.hZ90b9FELx3L3kZq2hud3_afM0WLRSfhKRnyrCSckpgMQ"},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[775587843],"tags":[775588040,775588035,29949403,11744374,775588041,775588026,775588036,29172,202,775588039],"class_list":["post-3771","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcast","tag-carried-interests","tag-fund-economics","tag-fund-structure","tag-general-partner","tag-hurdle-rate","tag-limited-parter","tag-lpa","tag-private-equity","tag-venture-capital","tag-waterfall","en-US"],"jetpack_publicize_connections":[],"jetpack_likes_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pg8vem-YP","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/i0.wp.com\/slowsteps.com\/wp-content\/uploads\/2026\/09\/Gemini_Generated_Image_j8o7zsj8o7zsj8o7.jpeg?fit=2816%2C1536&ssl=1","_links":{"self":[{"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/posts\/3771","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/users\/94403148"}],"replies":[{"embeddable":true,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/comments?post=3771"}],"version-history":[{"count":9,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/posts\/3771\/revisions"}],"predecessor-version":[{"id":3784,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/posts\/3771\/revisions\/3784"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/media\/3768"}],"wp:attachment":[{"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/media?parent=3771"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/categories?post=3771"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/slowsteps.com\/wp-json\/wp\/v2\/tags?post=3771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}