GP / LP

GP / LP — the two roles in a syndication or private fund. The general partner (GP) organizes and operates the deal, carries the liability, and earns the promote/carry. Limited partners (LPs) supply capital passively; their liability is limited to what they invested, and their returns are whatever the waterfall says after fees. Every private-deal pitch you’ll ever receive is asking you to be an LP; every syndication you might one day lead makes you the GP. Know which chair you’re in and read the economics of the other one.

First used in: 5.2 · The ten breakthrough patterns