How to become a billionaire – leaked DST document reveals secrets of Yuri Milner’s colossal internet success

milner money

DST Deal Terms – or how to afford the most expensive house in the USA

DST charges an annual management fee of 2%, dropping to 1.5% if the investment is over $100m. So a healthy €15m annual income will be accrued from a $1bn investment – nice, especially when DST remains a team of nine, and could explain Milner buying a lavish, 255,000 square ft mansion in Silicon Valley – thought to be the most money at the time paid for a single-unit home in the US.


There is a Hurdle Rate on DST investments of 8% – the minimum rate of return before management can collect fees. So until the fund has made the invested capital plus a minimum interest rate of eight percent, the general partner of the fund gets nothing.

Only when the fund has made a profit equal to the hurdle rate can the General Partner siphon off profits.

Once the hurdle rate has been achieved, the management’s share of profits (Carried Interest) is 20% – this is a standard breakdown in the industry. So, for example – if DST had a $1bn fund, which made less than $80m in profit (8% hurdle rate), there would be no profit0sharing for the general partner. But a profit of $1bn is likely to reap a sum of $200m for DST (20% carried interest).

A management fee of between one and three percent for large funds is common for these types of VC companies, as is a profit share of 20 per cent. But it’s a shrewd move on the part of DST, intended to provide investors a security that the general partner won’t be completely risk-averse and rely just on a management fee.

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