Limited Partners (LPs)

Extracted Attributes

• Role

  Investor, Capital Provider

• Liability

  Limited to the amount of capital invested

• Involvement

  Passive (not involved in day-to-day management)

• Governing Document

  Limited Partnership Agreement (LPA)

• Primary Contribution

  Capital (money or assets)

• Typical Types of LPs

  Institutional investors, high-net-worth individuals, sovereign wealth funds

• Profit Allocation Method

  Distribution waterfall

• Benefit from Evergreen Funds (Sequoia Capital context)

  Long-term compounding returns of generational companies

• Impact of Sequoia-backed Companies (Sequoia Capital context)

  Represent over 30% of NASDAQ's total value

Distribution waterfall

In private equity investing, distribution waterfall is a method by which the capital gained by the fund is allocated between the limited partners (LPs) and the general partner (GP).

Web Search Results

• Limited Partner (LP): Responsibilities & Role in Private Funds - Carta

  A limited partner (LP) is an investor who contributes capital to business partnership in exchange for a proportionate share of the profits. Limited partners are not involved in the day-to-day operations or decision-making processes; these responsibilities are handled by the general partners (GPs). LPs have limited liability for any debts the business might incur, and are only liable for the amount of capital they invested. [...] A limited partnership structure is a business arrangement that involves at least one limited partner and at least one general partner. The LP provides the capital, while the GP operates the business. The relationship between limited partners and the partnership is governed by a limited partnership agreement (LPA), which outlines the rights, responsibilities, and profit-share arrangements of all parties. Limited partners typically receive updates about the partnership’s performance and returns [...] In private equity and venture capital, a limited partner is an investor who contributes capital to the fund but does not participate in its day-to-day management. These private funds are typically formed as limited partnerships, with the investment firm serving as the general partner. Firms then use those funds to invest in private companies, and the limited partners receive a share of any eventual profits. In private capital, limited partners are the original source for most of the funding

• 4.1 - The Importance of Limited Partners - VC Lab

  Limited partners, or LPs, are the cornerstone of the venture capital model. They provide the necessary capital that venture capitalists use to invest in startups and emerging companies. Without the funds from LPs, venture capitalists would lack the resources to identify, evaluate, and invest in promising enterprises. By definition, venture capitalists act as stewards of third-party capital; they don’t primarily invest their own money. Instead, they manage the capital pooled from LPs, seeking [...] Limited partners, commonly referred to as LPs, are passive investors in venture capital funds. They are the main customers and ultimate backers of the venture capital model. Without LPs, venture capital would not exist. The relationship between the fund managers and the Limited Partners is complex. This article covers the history and reality of managing Limited Partners. ### The History of Limited Partners [...] Limited Partners (LPs) are fundamental to the lifeblood of venture capital. Their capital fuels startups and innovation, but in return, they have specific expectations from the funds they invest in. These expectations span not just the potential financial gains, but also the clarity, integrity, and modus operandi of the venture capital firm. Understanding these is crucial for venture capitalists seeking to build and maintain strong LP relationships.

• What are Limited Partners? - EQT Group

  Limited Partners (LPs) are the main providers of capital in private equity (PE) funds. This guide explores who LPs are, their motivations for investing in PE funds and their evolving role in the PE ecosystem. TL;DR Limited Partners (LPs) are the bedrock of private equity, providing the bulk of the capital that drives investment. Institutional investors, high-net-worth individuals, and sovereign wealth funds make up the majority of LPs investing in private equity. [...] The Limited Partners (LPs) are the investors who provide most of the capital in the fund. ‘Limited’ refers to the fact they have ‘limited liability’, meaning they can only lose up to the amount they invested. The General Partner (GPs) has full liability and decision rights over the fund. [...] Roles and responsibilities can vary between structures, but usually, Limited Partners are the main providers of capital in private equity and come from different backgrounds and sectors. Three types of LP currently dominate the landscape: ### Institutional Investors

• Limited Partner (LP) - Equirus Wealth

  A Limited Partner (LP) is an investor in a limited partnership, typically in the context of private equity or venture capital funds. LPs provide capital to the fund but have limited liability and do not participate in the day-to-day management of the investment activities. Their financial risk is confined to the amount they invest, protecting their personal assets from any liabilities incurred by the partnership. ## Key Characteristics of Limited Partners [...] 1. Glossary 2. Limited Partner # Limited Partner ## Key Highlights A Limited Partner (LP) is an investor in a limited partnership, typically in the context of private equity or venture capital funds. Roles and responsibilities include investment commitment, monitoring performance and legal agreement. ## What is Limited Partner? [...] Capital Contribution: Limited partners commit a certain amount of capital to the fund, which is then used by the general partner (GP) to make investments in various assets, such as companies or real estate. Limited Liability: LPs are only liable for the debts and obligations of the partnership up to the amount of their investment. This means that if the partnership incurs losses or debts, LPs are not personally responsible beyond their committed capital.

• Limited Partnership - Overview, Characteristics, Examples

  Read Time 7 minutes ## What is a Limited Partnership? A limited partnership (LP) is a type of business structure recognized in many countries around the world. Fundamentally, it is simply a legal partnership between two or more partners. There must be at least one limited partner and one general partner (GP) to form a limited partnership. The general partner oversees and manages the limited partnership, and the limited partners are not active in managing the business. [...] Limited Partners (LP): LPs contribute either money or assets to the partnership in order to share in the partnership’s profits (or losses). Limited partners are not involved in the day-to-day management of the partnership. In other words, LPs are considered passive investors. In a worst-case scenario, limited partners would only lose the amount of their investment. [...] Limited partnerships are typically set up as investment vehicles for a certain purpose like investing in a real estate project or a venture capital fund. In such cases, the general partner manages the investment and the partnership itself may have a limited life (funds may need to liquidate, or exit, their investments at some point over the defined life of the fund).