Limited Partner (LP)
An investor who commits capital to a venture fund but has no role in day-to-day investment decisions.
Limited partners are the investors — pension funds, endowments, family offices, sovereign wealth funds, funds of funds, and high-net-worth individuals — who commit capital to a venture fund in exchange for a share of its returns. LPs have limited liability, meaning their maximum loss is capped at the capital they committed, and no control over individual investment decisions, which is the GP's job.
LPs commit capital upfront but typically don't wire the full amount immediately; instead, the GP calls capital in tranches over the fund's investment period as deals close, via capital calls. LPs earn returns through distributions as portfolio companies are sold or go public, net of the fund's management fee and carried interest.
LPs evaluating a new fund should look closely at DPI and realized exits from the GP's prior funds, GP commitment size relative to fund size, and how concentrated the GP's best returns have historically been in just one or two outlier deals.
Can an LP lose more than what they committed to a fund?
No — limited liability means an LP's maximum loss is capped at their total capital commitment to the fund, unlike a general partner who bears broader liability.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.