A Limited Partner is an investor in a venture capital or private equity fund. LPs provide the capital that GPs deploy. In return, LPs receive their proportional share of investment returns minus the GP's management fee and carry. LPs have limited liability — their maximum loss is their committed capital — and limited governance rights. They cannot direct individual investment decisions, though they may have seats on a Limited Partner Advisory Committee (LPAC) that handles conflicts of interest and fund-level decisions.
The LP universe is diverse: university endowments (the most sophisticated LP class, with Harvard Management and Yale Investments being canonical examples), sovereign wealth funds, public pension funds, insurance companies, banks, fund of funds, family offices, and — increasingly — high-net-worth individuals through special purpose vehicles. Each LP type brings different return requirements, reporting expectations, time horizons, and co-investment appetites.
For emerging fund managers, LP relationships are the foundation of the business. The first fund is almost always raised from known individuals — former colleagues, angel network contacts, family offices with personal relationships to the GP. Subsequent funds layer in institutional capital as the track record becomes legible. Understanding what different LP types need — endowments need long time horizons and inflation-beating returns; family offices need flexibility and co-invest access — is the core of fund fundraising strategy.