LP (Limited Partner)

Definition

Institutions or individuals who invest capital into VC funds. The people whose retirement money is being gambled on whether your app will work.

Example Usage

Our VC firm's LPs are mostly pension funds and university endowments, which means they're very interested in 10-year returns.

Origin

Partnership law terminology applied to venture capital structures

Fun Fact

LPs often have no idea what their money is actually invested in, trusting VCs to be competent—a surprisingly common mistake

Source: Venture capital fund structure terminology

Related Terms

Beginner

Board of Directors

A governing body that theoretically oversees your startup but mostly just attends meetings and questions your decisions, led by the investors who own significant stakes.

🚀 Startup / VC

Intermediate

Acquisition (Acqui-hire)

When a company buys another startup not for its product, but primarily for its team. The startup equivalent of a zombie becoming useful.

🚀 Startup / VC

Advanced

shotgun clause

A buyout mechanism where one co-founder can offer to buy out another at a specific price, and the recipient must either sell at that price or buy the offerer's shares at the same price. The nuclear option for irreconcilable founder disputes.

🚀 Startup / VC

Beginner

spray and pray

An investment strategy of making many small bets across countless startups, hoping a few will hit big enough to compensate for the inevitable carnage. The venture capital equivalent of buying lottery tickets in bulk.

🚀 Startup / VC

Intermediate

power law

The mathematical reality that in venture capital, one or two investments generate nearly all the returns while the rest are mediocre or dead. Why VCs can lose money on 90% of their portfolio and still return 3x the fund.

🚀 Startup / VC

Intermediate

frieNDA

A handshake agreement between friends to keep something confidential—no lawyers, no paperwork, just mutual trust and the vague hope nobody steals your million-dollar idea. It's an NDA for people too broke to afford an actual NDA.

🚀 Startup / VC

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