No, it doesn't work like this. Assume carry is 100%, irrespective of fund size. When you give carry to a VP, it's a % of 100%. So, if you decided to give a VP 5% it will be 5% of 100% of the carry. This has nothing to do with the fund size.
Also, the extreme example that you have above is unrealistic. It's common for funds to over-subscribe the target stated on the LPA, but it's not common for funds to over-subscribe by that much nor will LPs be ok with you doing this because it drastically changes their return profile.
So, in practice, it's normal for people to maybe over-subscribe by 50% - 200%, but not 500%.
In the event that you truly had that much more demand from LPs, you would close a Fund 1 and move the rest of the demand into Fund 2.
Also, the extreme example that you have above is unrealistic. It's common for funds to over-subscribe the target stated on the LPA, but it's not common for funds to over-subscribe by that much nor will LPs be ok with you doing this because it drastically changes their return profile.
So, in practice, it's normal for people to maybe over-subscribe by 50% - 200%, but not 500%.
In the event that you truly had that much more demand from LPs, you would close a Fund 1 and move the rest of the demand into Fund 2.
