Limited Partner (LP)

Quick Definition

Investors who provide capital to venture funds but don't participate in investment decisions.

What is an LP?

Limited partners are the investors in a VC fund. They commit capital, pay fees, and receive returns, but don't choose which startups to invest in. That's the GP's job.

Types of LPs

Pension funds, endowments, foundations, family offices, fund-of-funds, sovereign wealth funds, and high-net-worth individuals. Different LPs have different return expectations and time horizons.

LP-GP Relationship

LPs trust GPs to deploy capital wisely. They conduct due diligence before committing, receive quarterly reports, and can influence future fund raises through their continued support or withdrawal.

Formula

Typical LP commitments:

• Institutional (pension, endowment): $25M-$100M+
• Family office: $5M-$25M
• High-net-worth individual: $1M-$10M
• Fund-of-funds: $10M-$50M

Example

VC raises Fund III:

• University endowment: $30M (15%)
• State pension fund: $40M (20%)
• Two family offices: $20M each (20%)
• Fund-of-funds: $25M (12.5%)
• Various individuals: $65M (32.5%)

Total: $200M fund. LPs are passive; GP makes all decisions.

Related Terms

Most Favored Nation (MFN)
A provision guaranteeing an investor will receive terms at least as favorable as any subsequent investor receives.
Learn more

Qualified Financing
The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs.
Learn more

Maturity Date
The deadline by which a convertible note must be repaid or converted to equity.
Learn more

See These Metrics in Action

Futureproof automatically tracks MRR, ARR, churn, runway, and more — so you can stop calculating and start scaling.