Limited Partner (LP)

TL;DR

A passive investor in a venture fund, providing capital but not making investment decisions, and limited in liability to their commitment amount.

Limited Partners are the capital providers for a venture fund. Typical LPs include endowments, foundations, pension funds, sovereign wealth funds, fund-of-funds, family offices, and high-net-worth individuals. LPs commit capital to the fund, which is called over the investment period as the GPs find investments.

LPs sign a Limited Partnership Agreement (LPA) that governs fees, carry, fund duration, governance, and other key terms. They have limited liability — they can lose only what they committed — and limited involvement in investment decisions.

Worked example

A $400M growth fund has 32 LPs: 8 endowments (40% of capital), 6 family offices (15%), 4 sovereign wealth funds (20%), 10 fund-of-funds (15%), and 4 strategic corporates (10%). Each LP's commitment ranges from $1M to $50M.

Common pitfalls

• Treating LP relationships transactionally rather than as long-term partnerships.
• Concentrating LP base too heavily in one type of investor.
• Failing to communicate clearly during difficult fund vintages.

When this shows up in a pitch deck

Founders rarely talk to LPs directly, but understanding LP incentives helps when negotiating with the GPs they back.

See Limited Partner in context

Limited Partner shows up most often in these scoring rubrics and investor profiles — jump straight to who cares about it and how to pitch them.

For investor types

• Impact Investor — Mission & Returns

Related terms

• General Partner — A managing partner of a venture fund, responsible for sourcing, diligence, investment decisions, and value-add to portfolio companies.
• Carry (Carried Interest) — The share of fund profits paid to the GPs above a defined hurdle, typically 20% in venture funds — 'carry' is the GP's economic upside.
• Management Fee — An annual fee LPs pay GPs to operate the fund, typically 2% of committed capital during the investment period and lower after.
• Hurdle Rate — The minimum annualized return GPs must deliver before they can begin earning carried interest.
• Family Office — A private wealth-management entity investing on behalf of one family (or a few), often allocating to startups directly or via VC funds.

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