The General Partner is the managing entity of a venture capital fund. The GP makes investment decisions, manages the portfolio, provides value-add services to portfolio companies, and ultimately returns capital to LPs. The GP earns a management fee (typically 2% of committed capital, used to pay team salaries and operating costs) and carried interest (typically 20% of profits above a preferred return hurdle, the GP's primary economic upside).
The GP structure creates a significant incentive toward risk-taking and power-law outcomes. Because 80% of profits go to LPs after the hurdle rate is met, the GP's primary incentive is to generate exceptional outliers rather than reliable moderate returns. A portfolio of 30 companies returning 2x each is far less valuable to a GP than a portfolio of 30 companies where one returns 50x and the rest return 0. This structural fact explains much of venture capital's behaviour that puzzles outsiders.
In an emerging manager context, the GP team is typically two or three individuals — often former founders, operators, or investors — who have a differentiated sourcing edge and a coherent investment thesis. The GP's track record, sourcing network, and portfolio support capabilities are the primary evaluation criteria for LPs deciding whether to commit. An emerging manager GP raising their first fund must compensate for limited track record with exceptional specificity of thesis and demonstrable sourcing advantage.