Definition

Limited Partner, the institutional investors and wealthy individuals who provide capital to VC funds, essentially the VCs' VCs. They're the puppetmasters who rarely appear but whose capital enables the whole show.

Example Usage

Our VC is raising their next fund and spending half their time on the road pitching LPs instead of helping portfolio companies.

Origin

Limited partnership structure from partnership law

Fun Fact

LPs include pension funds, university endowments, and family offices who collectively provide the hundreds of billions powering the startup ecosystem.

Source: Partnership law and fund structure terminology

Related Terms

Advanced

preferred return

The minimum annual return (typically 8%) that limited partners receive before general partners can claim carried interest, functioning as a hurdle rate to ensure LPs get paid first. Think of it as making the GP eat their vegetables before getting dessert.

🚀 Startup / VC
Intermediate

Cliff

The initial period before any stock options vest, typically one year, during which employees own exactly nothing and question all their life choices. It's called a cliff because if you leave before it, you fall off the edge of ownership into the abyss of having worked for below-market salary for nothing.

🚀 Startup / VC
Intermediate

multiple on invested capital

The total value returned to investors divided by the total amount invested, ignoring time. It's the simple, honest metric that tells you whether you made or lost money, period.

🚀 Startup / VC
Intermediate

Acqui-Hire

When a company buys another company not for its product but for its employees, which is the corporate equivalent of buying a house just for the kitchen. The product gets quietly killed while the team gets quietly absorbed and quietly regrets everything.

🚀 Startup / VC
Beginner

Elevator Pitch

A 30-second summary of your startup that you deliver to investors in elevators, coffee lines, and restraining-order-adjacent proximity. If you can't explain your company in the time it takes to ride an elevator, your company is either too complicated or the elevator is too fast.

🚀 Startup / VC
Intermediate

co-sale rights

Also called tag-along rights, these allow minority shareholders to join a sale transaction if majority holders are selling their shares. The 'if you're abandoning ship, I'm coming too' clause.

🚀 Startup / VC

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