Limited partner (LP)
Also called LP, Limited partners, Fund investor.
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. Fund LPs are typically institutions, family offices, funds of funds and individuals who meet the accredited investor or qualified purchaser tests.
Example
A $50M fund has 25 limited partners. A university endowment commits $10M, 20% of the fund; a family office commits $2.5M, 5%; a fund of funds commits $7.5M. Every capital call is pro rata, so a $5M call takes $1M from the endowment and $250,000 from the family office. Over the life of the fund the endowment contributes at most $10M, whatever the fund's liabilities turn out to be. Its capital account tracks what has happened to that money, and its unfunded commitment is $10M less contributions, plus any distributions the LPA lets the fund recall.
Confused with
General partner. The GP controls the fund and has unlimited liability. The LP is passive and capped.
Advisory committee. The LPAC is a small group of LPs, chosen under the LPA, that approves conflicts and valuations. Most LPs are not on it and have no vote on those matters.
Member of an SPV. An investor in an LLC vehicle is a member, not a partner, though the economics look the same.
In practice
Limited liability depends on the LP staying out of management, which is why the LPA keeps LP rights to consents and advisory committee seats rather than decisions. An LP that misses a capital call becomes a defaulting LP and faces the remedies in the LPA, and an LP that wants out sells its interest in a transfer that needs GP consent.