Fundraising and closing

General partner (GP)

Also called GP, GP entity, Sponsor.

Definition

A general partner is the partner in a limited partnership that controls the partnership, makes its investment decisions and has unlimited liability for its obligations. In a fund, the GP is usually a special purpose entity owned by the firm's principals that makes the GP commitment and receives the carried interest, while a separate management company employs the team and earns the management fee.

Updated October 9, 2026Checked against our editorial standards

Example

A $50M fund is organised with "Fund I GP, LLC" as its general partner and "Firm Advisers, LLC" as its management company. The GP entity commits 2%, or $1M, alongside the LPs and holds the right to 20% carried interest. The management company receives the 2% fee, $1M a year during the investment period, and pays salaries, rent and the administrator. The fund returns $120M on $50M paid in. Profit is $70M and carry is $14M, paid to the GP entity and split among the principals under its own operating agreement. The GP's $1M commitment also earns its share of the LP-level return, about $2.1M after carry.

Confused with

Management company. The management company, or adviser, is the operating business and the entity that registers with or reports to the SEC. The GP is the partner in the fund. One is paid the fee, the other the carry.

Managing partner. A person with a title at the firm. The general partner is an entity.

In practice

The GP is a shell for a reason: it carries unlimited liability for the fund, so nothing else is held in it. The LPA sets out how the GP can be removed, usually by a supermajority of LP commitments with or without cause, and what happens to its carry if it is. The GP's own capital account is tracked separately from its carried interest account, and auditors check that the two are not mixed.

Related terms

Limited partner (LP)A limited partner is an investor in a limited partnership fund who contributes capital up to a committed amount, has liability limited to that commitment, and takes no part in managing the partnership.
Carried interestCarried interest is the general partner's share of a fund's profits, typically 20%, paid through the distribution waterfall only after limited partners have received their contributed capital and, usually, a preferred return.
GP commitmentGP commitment is the capital the general partner and its principals commit to their own fund, called alongside limited partner capital and sharing in the same investments, usually without management fee or carried interest charged on it, which limited partners read as evidence that the manager's own money is at risk with theirs.
Management feeThe management fee is an annual charge paid by the fund to the management company, typically 2% of committed capital during the investment period, often stepping down afterwards to a lower rate or a basis of invested capital, to cover salaries, rent and the cost of running the firm.