Full Definition
A general partner (GP) is the managing entity or individual(s) who operate a venture capital or private equity fund. GPs make investment decisions, manage portfolio companies, raise capital from limited partners, and are responsible for generating returns.
GP Responsibilities
- Fundraising: Raising capital from LPs for new funds
- Sourcing: Finding and evaluating investment opportunities
- Investment decisions: Conducting due diligence and making investment choices
- Portfolio management: Supporting portfolio companies with strategy, hiring, and follow-on decisions
- Exits: Guiding companies toward successful exits
- Reporting: Providing performance updates to LPs
GP Economics
GPs typically receive 2% annual management fee on committed capital plus 20% carried interest on profits. They also usually commit 1-5% of the fund's capital as their own investment ("GP commit").
Real-World Example
Three general partners manage a $200M fund, each contributing $2M of personal capital and collectively earning 20% carry on profits.
Related Terms
An investor who contributes capital to a venture fund but does not participate in day-to-day management.
A form of private equity financing provided by firms to startups with high growth potential.
The share of investment profits (typically 20%) that fund managers receive as performance compensation.
The managing partner(s) of a venture fund who make investment decisions and manage the portfolio.
Investment firms that acquire stakes in or buy out mature companies to improve operations and resell at a profit.
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