# 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.  
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**Qualified Financing**  
The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs.  
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**Maturity Date**  
The deadline by which a convertible note must be repaid or converted to equity.  
Learn more

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