General Partner (GP)
Definition
The managing entity of a private equity or venture capital fund, responsible for making investment decisions, managing portfolio companies, and generating returns for investors. GPs typically earn management fees and carried interest. GPs are responsible for identifying, acquiring, and developing portfolio companies, with increasing emphasis on building intangible asset value through operational improvements, technology investment, and brand development.
Complementary Terms
Concepts that frequently appear alongside General Partner (GP) in practice.
An investor in a private equity or venture capital fund who contributes capital but does not participate in day-to-day investment management. LPs include pension funds, endowments, family offices, sovereign wealth funds, and high-net-worth individuals.
An annual fee charged by a fund manager (general partner) to cover operational costs, typically calculated as 1.5% to 2.5% of committed capital during the investment period and assets under management thereafter. Management fees are separate from carried interest.
The share of investment profits that a fund manager (general partner) receives as performance-based compensation, typically 20% of profits above a hurdle rate. Carry is the primary financial incentive for venture capital and private equity fund managers.
An investment vehicle that allocates capital to a portfolio of private equity, venture capital, or hedge fund managers rather than investing directly in companies. Fund of funds provide diversification across managers, strategies, and vintages, though they involve an additional layer of management fees and carried interest.
A direct investment made by a limited partner alongside a private equity or venture capital fund in a specific portfolio company. Co-investments allow LPs to increase exposure to particular deals, typically at reduced or no management fees and carry, while giving the GP additional capital for larger transactions.
A clause in a private equity or venture capital fund agreement that adjusts the distribution of carried interest at the end of the fund's life to ensure the general partner has not received more carry than entitled based on overall fund performance. Lookback provisions protect limited partners against early distributions that overstate returns.
A formal demand made by a private equity or venture capital fund's general partner requiring limited partners to transfer a portion of their committed capital to fund investments, management fees, or fund expenses. Capital calls are issued as investment opportunities arise rather than collecting all committed capital upfront, and the pace of capital calls relative to distributions is a key measure of fund performance.
The year in which a private equity or venture capital fund makes its first investment or its final close. Vintage year is used to group and compare fund performance because macroeconomic conditions at the time of investment significantly influence returns.
Put this knowledge to work
Use Opagio's free tools to measure and grow the intangible assets that drive your business value.