What is a hurdle rate?

A hurdle rate (preferred return) is a minimum return LPs must receive before the GP collects carry — commonly 8% in private equity. Below the hurdle, all profits go to LPs.

Venture funds mostly have no hurdle, on the argument that venture's dispersion makes one less meaningful; where hurdles exist, a 'catch-up' typically restores the GP's full carry share once the hurdle is cleared.