Fund Mechanicscapital-under-management

Capital Under Management (AUM)

Also known as AUM, Assets Under Management, Regulatory Assets Under Management, RAUM

Mikael Andersson
Mikael Andersson
VC Analyst · Updated

Capital under management (AUM) is the total committed or fair-value capital a firm manages across all its funds. SEC-registered advisers report a specific variant, regulatory assets under management (RAUM), on Form ADV using fair-market value within 90 days of filing.

Formula

AUM = Σ (Committed Capital_i)   OR   AUM = Σ (NAV_i + Uncalled Commitment_i)
Committed Capital_i
Total LP commitments to fund i, including the GP commitment
NAV_i
Current fair-market value of fund i's portfolio
Uncalled Commitment_i
Capital still available to call from LPs in fund i

In depth

AUM looks like a single number and is anything but. A VC firm can quote three different AUMs for the same balance sheet on the same day, all defensible. Committed AUM counts every dollar LPs have promised across all funds. Fair-value AUM marks the live portfolio to current valuations. Invested AUM is the cost basis of deployed positions. SEC RAUM is its own variant, governed by Form ADV's "continuous and regular" supervisory test and fair-market valuation within 90 days.

The variation matters because compensation and regulation follow specific definitions. Management fees usually compute against committed capital during the investment period and net invested capital thereafter, not against fair-value AUM. SEC registration triggers off RAUM at the $150M threshold for private fund advisers. LP marketing decks tend to lead with the headline that flatters most, which is usually committed AUM.

Why it matters

A $1B AUM firm is not necessarily a $1B-deployed firm. The number can include uncalled dry powder, marked-up but unrealized positions, separately managed accounts, and SPV vehicles. LPs underwriting a new commitment dig into the composition to understand how much capital the team is actively managing today versus carrying as paper or pre-deployment commitments. Regulators care about a different cut, RAUM, because it determines who must register and what disclosure regime applies.

Worked example

Acme Ventures, three active funds:

FundVintageCommittedCalledCurrent NAVUncalled
Fund I2018$50M$48M$120M$2M
Fund II2021$150M$90M$130M$60M
Fund III2024$250M$40M$42M$210M
Total$450M$178M$292M$272M

Committed AUM: $450M. Fair-value plus uncalled (typical SEC RAUM proxy): $292M + $272M = $564M. Invested (called) capital: $178M. Three different but legitimate AUM numbers for the same firm, used in different contexts: marketing, regulatory filings, and LP analytics.

Frequently asked

What is the difference between committed and invested AUM?

Committed AUM is total LP commitments across all funds, regardless of whether capital has been called. Invested AUM is the cost basis of capital actually deployed. A firm with three $100M funds has $300M committed AUM, but its invested AUM could be anything from $50M to $300M depending on deployment stage.

What is regulatory assets under management (RAUM)?

RAUM is the specific AUM definition SEC-registered investment advisers report on Form ADV. It is fair-market value of assets managed on a continuous and regular basis, computed within 90 days of filing. For private fund advisers, RAUM typically equals NAV plus uncalled commitments per the SEC's Form ADV instructions.

Why does AUM matter for a VC firm?

AUM drives management fee revenue (a percentage of committed capital), team scale, fund-of-funds eligibility (some LPs require a minimum AUM), and reputational signaling. It is also the basis for SEC registration thresholds: private fund advisers with $150M+ in RAUM must register with the SEC.

Does dry powder count toward AUM?

Yes, for committed AUM and for SEC RAUM. Both include uncalled commitments because the GP has the legal right to call that capital. Some firm-level marketing AUM numbers exclude dry powder; LPs read these carefully because the distinction can double or halve the headline number.

How does AUM change over a fund's life?

Committed AUM is set at final close and stays fixed. Fair-value AUM rises with markups and exits, then falls as distributions return capital to LPs. By the end of a fund's harvest period, fair-value AUM for that fund approaches zero, and the firm's headline AUM depends on newer vintages.

Sources & further reading