General partner (GP) vs limited partner (LP): key differences explained
Who runs the fund and who funds it: control, liability, economics and liquidity of the two seats in a limited partnership, criterion by criterion.
The short answer
GP vs LP comes down to who runs the partnership and who funds it. The general partner manages a fund, makes every investment decision and carries unlimited liability for its debts; limited partners supply most of the capital, have no say in day-to-day decisions and can lose no more than they put in. Which seat applies to you is rarely in doubt: if you are investing money in a fund, a real-estate syndicate or an SPV, you are the limited partner, or its equivalent. What changes between deals is the fine print of that seat — what you pay the GP, when you can get out, and what you can vote on.
GP vs LP: the differences, criterion by criterion
The criteria below were chosen before the cells were filled in. Legal points are stated under Delaware law, where most US funds and SPVs are formed; other jurisdictions have equivalents that differ in detail. The verdict for the general partner The GP seat is control paid for with risk and time. The general partner decides everything and earns twice — a fee for running the fund and a share of the profit — but carries the partnership’s liabilities, its fiduciary duties and the reputational cost of a bad fund.
Why the GP carries the liability, and how it limits it
Delaware law draws the line. A general partner “has the liabilities of a partner” in an ordinary partnership to anyone outside it (6 Del. C. §17-403) — and ordinary partners are liable jointly and severally for all of a partnership’s obligations (§15-306). A limited partner is not liable for the partnership’s obligations unless it is also a general partner or takes part in the control of the business, and even then only to people who reasonably believed it was a general partner (§17-303).
GP vs LP in private equity, VC and real estate: who earns what
GP vs LP in private equity — or PE — is the template for the others. The GP charges a management fee on committed or invested capital, which ILPA’s 2021 survey found steady at 1.5–2.0% a year, and takes carried interest, 20% of profit in 71% of funds sampled. LPs receive everything else, in the order the distribution waterfall sets. The GP also invests its own money alongside, and ILPA asks that this commitment be “substantial” and paid in cash, not by waiving fees (ILPA Principles 3.0). GP vs LP in VC The same seats, a longer clock.
GP vs LP funding: who puts in the money, and when
In a fund, LPs do not wire their money on day one. They sign a commitment, and the GP draws it down through capital calls as it finds investments, usually over several years. An LP that misses a call can lose part of its interest under the agreement’s default provisions. The GP is not required by Delaware law to contribute capital at all — a general partner can be admitted without one (§17-401) — so its commitment is a matter of the agreement and of what LPs insist on. Control over the money runs in one direction, with brakes.
GP vs LP vs LLP: three different things
The letters overlap and the structures do not. GP and LP are roles inside one limited partnership. An LLP is a different kind of entity altogether. General partnership Every partner manages and every partner is jointly and severally liable for the partnership’s obligations (6 Del. C. §15-306(a)). Limited partnership (LP) At least one general partner who manages and is liable, and limited partners who are liable only to the extent of their capital.
The same two seats in a single-deal SPV
A single-deal SPV divides the same roles, whether it is formed as a limited partnership or an LLC — in an LLC the manager or managing member plays the GP’s part and the members play the LPs’. On Axevil, each deal has one dedicated Delaware SPV managed by Axevil Capital, LLC; investors hold interests in that vehicle, and the vehicle holds the company’s shares. The difference from a fund is that you see the company before you commit, and the money is usually paid in once rather than called. How the structure works is in SPV investing and what is an SPV.
How GPs and LPs are taxed
A partnership generally pays no US income tax itself. It passes its profit and loss through to the partners, who report their distributive share from Schedule K-1 whether or not any cash was distributed (IRS Publication 541). The difference between the seats is in two places. A limited partner’s distributive share is excluded from self-employment income, apart from guaranteed payments for services (26 U.S.C. §1402(a)(13)). And the GP’s carried interest has its own holding-period rule, covered in the carried interest loophole.
Common mistakes about the two seats
Assuming limited liability means limited loss It caps what you owe beyond your commitment. You can still lose the whole commitment. Forgetting the uncalled commitment In a fund, what you signed for is owed when called — not only what you have paid so far. Expecting to exit when you like An LP interest usually needs the GP’s consent to transfer; selling one is a negotiated secondary sale. Reading the GP’s fee without its commitment A GP with little of its own money in the fund is aligned mainly through carry.
The terms this page uses
General partner (GP) The partner that manages a limited partnership and is liable for its obligations. Limited partner (LP) A partner that contributes capital, takes no part in management and is liable only up to its commitment. Limited partnership agreement (LPA) The contract that sets the fund’s terms: fees, carry, waterfall, voting, removal and transfer. Commitment The amount an LP agrees to invest, drawn down over time through capital calls. Management fee The GP’s annual fee for running the fund, charged whether or not it makes money.
Questions about GPs and LPs
Can a limited partner lose more than it invested? Not under the partnership’s debts, as long as it stays out of control of the business. But it can lose its whole commitment, it may owe capital still uncalled, and the agreement can require it to return distributions to cover fund liabilities, up to a cap. Can a GP also be an LP? Yes. A GP usually invests its own commitment alongside the LPs and receives returns on it like they do, in addition to its fee and carry. In Delaware, a person who is both is liable as a general partner. Who is the GP in a venture capital fund?
Can a limited partner lose more than it invested?
Not under the partnership’s debts, as long as it stays out of control of the business. But it can lose its whole commitment, it may owe capital still uncalled, and the agreement can require it to return distributions to cover fund liabilities, up to a cap.
Can a GP also be an LP?
Yes. A GP usually invests its own commitment alongside the LPs and receives returns on it like they do, in addition to its fee and carry. In Delaware, a person who is both is liable as a general partner.
Who is the GP in a venture capital fund?
The venture firm, through an entity formed for that fund — typically an LLC controlled by the firm’s partners. The firm’s management company usually receives the management fee, and the GP entity receives the carry.
Do LPs have any control over a fund?
Only what the agreement gives them: votes on amendments, extensions, conflicts and, in many funds, removing the GP. Day-to-day investment decisions are the GP’s alone.
Am I an LP when I invest through an SPV?
In substance, yes: you supply capital and the manager runs the vehicle. If the SPV is an LLC rather than a partnership, you are a member and the manager is the managing member, but the division of control and liability is the same.
Where the rules on this page come from
Rules and figures were last verified on 1 October 2026. Legal points are Delaware law and US federal tax; other jurisdictions differ. Market figures are from ILPA’s published survey and describe funds, not any particular SPV.