General partner (GP)

The manager of a private fund structured as a limited partnership, responsible for investment decisions and usually paid through fees and carried interest.

Example

A venture firm acting as GP of its third fund.

Important

GPs make the decisions; LPs supply most of the money.

Related terms

  • Limited partner (LP) — An investor in a private fund structured as a limited partnership, who commits capital, has limited liability and generally has little control over investment decisions.
  • Carried interest — The share of a fund's profit that the manager keeps, conventionally around twenty percent, usually payable only above a defined return to investors.
  • Management fee — A recurring charge for running an investment, usually quoted as a percentage of the assets held and taken every year regardless of the result.

Lessons that explain it

  • A venture fund needs a few companies to return the whole fund — Venture capital firms invest other people's money in young companies, and their fund structure makes them look for rare, very large outcomes rather than steady good ones. (10 min)
  • LPs provide the money; GPs make the decisions — Most private funds are partnerships between limited partners, who commit capital and have limited liability and control, and a general partner, who manages the fund and earns fees and carried interest. (9 min)

All 578 terms in the Investing glossary