General Partner (GP)

In a fund structured as a limited partnership, the general partner raises money from limited partners, finds and evaluates investments, manages the portfolio of companies and decides when to sell. The term often refers to the investment firm itself or to its senior investment professionals.

The general partner usually invests some of its own money in the fund, often a small percentage of the total, to align its interests with those of the limited partners.

General partners are typically paid in two ways: an annual management fee, often around 2% of the capital committed or invested, and carried interest, a share of the fund's profits, commonly around 20%, usually paid only after limited partners receive a minimum return.

For example, a venture capital firm acting as general partner might raise a 200 million fund, invest in 25 start-ups over several years and help those companies grow, earning fees and a share of the profits.

In legal terms, a general partner in a traditional partnership has unlimited liability for the partnership's debts. In practice, fund general partners are usually set up as companies to limit this liability.