The General Partner (GP), also known as the Deal Lead, manages and makes investment decisions for a private equity or venture capital fund, playing a crucial role in the fund's success.
Key Points:
- Role and Responsibilities: GPs handle tasks such as raising capital, evaluating investments, managing the portfolio, and planning exits.
- Risk and Liability: GPs have unlimited liability, unlike Limited Partners (LPs) with limited liability.
- Fees: GPs earn a management fee (a percentage of assets) and carried interest (a share of profits), often following the "2 and 20" fee structure.
- Fiduciary Duty: GPs must act in the best interests of LPs, managing investments responsibly and transparently.
- Relationship with LPs: Governed by a Limited Partnership Agreement (LPA), it outlines the partnership's terms, rights, obligations, investment strategy, and fees.
GPs significantly influence the fund's performance and LP returns in private equity and venture capital.