Limited Partner (LP)
A limited partner (LP) provides capital to a private equity or venture capital fund but does not participate in the fund’s management or daily operations. LPs have limited liability, meaning they are only responsible for the amount of capital they’ve invested. Their primary role is to invest capital and receive a return on their investment, typically through distributions and capital gains, without direct involvement in fund operations.
Key Takeaways
- Invests capital in a private equity or venture capital fund.
- Has limited liability and no operational involvement.
- Receives returns through distributions and capital gains.
- Critical source of capital for private funds.
