Funding & Investment
Limited Partner
Also Known As
LPFund InvestorInstitutional Investor
A Limited Partner (LP) is an investor who commits capital to a venture fund (including venture studio funds) but has limited liability and no involvement in day-to-day investment or operational decisions.
What is a Limited Partner?
Limited Partners are the investors who provide capital to venture funds. They're "limited" because their liability is capped at their investment amount, and they don't participate in managing the fund. The fund managers (General Partners) make all investment decisions.
Types of LPs
-
Institutional LPs
- Pension funds
- Endowments (universities, foundations)
- Sovereign wealth funds
- Insurance companies
- Fund of funds
-
Individual LPs
- High-net-worth individuals
- Family offices
- Successful entrepreneurs
LP Economics
- Capital Commitment: Pledge to invest over fund life
- Capital Calls: Drawn down as investments are made
- Management Fee: Typically 2% annually
- Carried Interest: 20% of profits after returning capital
- Preferred Return: Hurdle rate before carry (often 8%)
LPs in Venture Studios
Studio funds attract LPs with:
- Higher ownership in portfolio companies (30-50% vs 10-20%)
- De-risked investments (validation before investment)
- Operational involvement
- Different return profile
Example Usage
“The studio raised a $50M fund from LPs including university endowments and family offices.”