A clawback is the refund or repayment of money that has already been contributed. In venture capital, a clawback obligation is when an adviser has to return a carried interest amount that exceeds the carried interest percentage provided in a fund agreement.

Excess carried interest occurs when 1) a fund is using an American waterfall where distribution happens on a deal-by-deal basis and 2) some deals overperformed while other deals in the fund underperformed. The carried interest the GP receives from those overperformed deals would sum up to a total carried interest amount that, when you account for the later underperformed returns, may result in a much higher carried interest rate for the GP.

For example: a $1M fund has 2 deals at $500k each in investment. The 1st deal has a 4x return, which nets $2M in return. In an American waterfall, the GP gets $300k in carry interest at a 20% rate. Assume the 2nd deal was a complete loss. So at the end of the fund's life, the fund overall got $2M in distributions $1M is returned back to the LPs, leaving $1M left as profit for the fund. Since the GP already received its carried interest distribution from the first deal, the GP's net carried interest is now 30% ($300k/$1M, which is far in excess of the stated 20% interest.