August Capital may get a bigger chunk of profits on $650M fund

August Capital‘s announcement that it raised a $650 million fifth fund may be even more impressive than it initially appeared. PEHub reports that the fund is August’s first to include a 30 percent carried interest structure (the percentage of profits used to pay general partners at firms).

Even normally, 30 percent would be on the high side — VentureBeat Editor Matt Marshall tells me the industry standard is closer to 25 percent — but the deal comes at a time of increasing pressure for VCs. Given the financial crash, it’s no surprise that venture funds are having a hard time raising money, and limited partners investing in those funds are becoming impatient to see better returns. So why did August get such a sweet deal? PEHub quotes a limited partner in the fund as saying, “They deserved the higher carry since they were one of the only firms to have actually earned carry in their last funds.”

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We asked David Hornik, a partner at August, if he could confirm the report. He replied:

Sorry. We don’t comment on the terms of our funds. I can say that we have had some great outcomes since 2000: Seagate went public, Atheros went public, Shopping.com went public and was bought by eBay for over half a billion dollars, Crystal Decisions filed to go public and was bought by Business Objects for just under a billion dollars, Postini filed to go public and was bought by Google for over a half a billion dollars. And we’re bullish about our current portfolio, as are our limited partners.

Of course, the firm may have to pay higher taxes on that 30 percent.