In-Depth Guide
Builders, operators, and investors who want the inside view on running a venture fund will find a practical look at duties, pay, and daily life as a GP.
In legal terms, a general partner is the party with unlimited liability and full control over a limited partnership. In practice, the GP functions as chief executive, chief investment officer, and chief fundraiser in one. The GP signs the partnership agreement, controls the management company, and carries personal fiduciary duty to the fund and its investors.
Because venture capital funds run ten years or more, the GP’s commitment is both financial and reputational. They pledge their own capital, direct the investment strategy, and stand in front of every portfolio win or loss. The role blends entrepreneurial hustle with institutional discipline: raising money from pension funds on Monday, debating product roadmap with a seed‑stage founder on Tuesday, and testifying to regulators on Wednesday.
The general partner (GP) is the managing owner of a venture fund. GPs create the fund’s legal entity, raise capital from limited partners, and accept fiduciary responsibility for every dollar committed. In exchange they receive management fees and a performance share known as carried interest.
A GP’s résumé often mixes operational success with investment chops. Many are former founders who exited a company, senior operators from high‑growth firms, or seasoned investors who climbed the VC ladder. They use this credibility to attract capital and differentiate their thesis in a crowded market.
Core tasks include building a proprietary deal flow engine, leading investment decisions, supporting portfolio companies, and steering fund economics. They must also handle investor relations, regulatory compliance, and firm culture. Why it matters: the GP’s judgment determines which founders get funded, how value is created, and whether limited partners ever see their money back. A skilled GP can spawn entire ecosystems, while an undisciplined one burns capital and trust.
Similarities: Both spend time researching markets, building networks, and modeling companies.
Differences: Analysts recommend; GPs decide. Analysts earn salary plus small bonus; GPs live on carry and reputation. Analysts have limited liability; GPs have unlimited liability and regulatory exposure.
Associates source deals and prepare memos but rarely hold board seats. GPs negotiate final terms, take board roles, and control capital calls. Associates hope to prove judgment; GPs demonstrate it by writing checks with their signature.
Principals are senior deal leads aiming for partnership. They can champion investments but need partner sign‑off. GPs set fund strategy, own LP relationships, and receive a larger share of carry. Principals risk missing promotion cycles; GPs risk personal capital and brand.
A venture partner is usually part‑time with limited voting rights, paid in small carry slices for sourcing or advising. The GP runs the firm full‑time, sets budgets, and answers to regulators. Venture partners can walk away at fund end; GPs must shepherd returns for a decade or more.
Operating partners help portfolio companies grow through functional expertise in areas like marketing or talent. They may earn project fees or micro‑carry. GPs oversee the whole investment funnel, from first pitch to exit, and decide whether to engage operating resources.
LPs provide capital and monitor performance. GPs invest that capital and manage portfolio companies. LPs diversify across many funds; GPs concentrate effort in their own fund. Governance flows one way: LPs can remove a GP under extreme scenarios, but GPs cannot remove LPs except for default.
Most GPs draw a salary from the management company that ranges from US $200 000 to $500 000 depending on fund size and geography. Bonus pools are modest, often 20 percent or less of salary, because true upside comes from carry.
Carried interest is the crown jewel. Standard terms allocate 20 percent of fund profits to the GP team after returning capital to LPs. New managers may split that 20 percent among two or three partners; mega‑funds can have complex carry tiers tied to hurdle rates or performance over time. Vesting usually spans the full life of the fund with clawback provisions to protect LPs.
Review overnight emails from global founders, answer LP follow‑ups, skim industry news, and run a quick pipeline meeting with the investment team. Action items include scheduling intro calls, approving diligence budgets, and confirming capital call amounts for the quarter.
Back‑to‑back founder pitches, each thirty minutes with a ten‑minute debrief. The GP probes market timing, founder insight, and proposed cap table. Lunch is a working session drafting a thought‑leadership post that highlights portfolio momentum without violating confidentiality.
Deep‑dive diligence on a potential Series A: connect with customer references, iterate on the financial model, and decide whether to issue a term sheet. Later, record a podcast episode with another GP to discuss sector trends. Finish by reviewing legal docs for an exit where the GP sits on the board.
Investor dinner with limited partners visiting from out of town. Discuss fund performance, macro headwinds, and pipeline quality. Secure soft commitments for the next fundraise. After dinner, respond to a founder crisis text about a competitor’s price war and set up an early call for next morning.
Catch up on reading, update personal notes on market theses, and peek at social media interactions that amplify the firm’s brand. Some nights end at a demo day; others are reserved for family or quiet reflection because burnout is a real threat.
Do GPs invest their own money?
Yes, they typically contribute one to five percent of fund commitments to signal alignment.
Is a GP the same as a partner title at every firm?
No, some firms use partner loosely while legal GP status means holding liability and decision authority.
How many boards does a GP sit on?
Commonly five to eight active boards per partner to maintain focus and bandwidth.
What happens if a GP leaves the firm?
The limited partnership agreement spells out key‑person provisions that can pause investments or trigger LP votes.
How long does it take to raise a fund?
First‑time GPs often spend twelve to eighteen months; established firms can close a new vintage in weeks.
Are GPs regulated by the SEC?
Most US‑based GPs register as investment advisers once assets exceed regulatory thresholds.
How do GPs source deals?
Warm referrals, proprietary content, thesis-driven outreach, and founder communities.
Can a GP be removed?
LPs can vote to remove for cause, such as fraud or gross negligence.
What is a management company?
The separate legal entity that employs staff and collects fees from the fund.
Do GPs pay themselves from carry?
Carry is distributed after a successful exit; it is not used for salaries.
How much time is spent fundraising?
Roughly ten to twenty percent of a GP’s calendar even in off‑cycle years.
What software tools matter most?
CRM for pipeline, portfolio monitoring platforms, and cloud data rooms.
How do GPs evaluate founder‑market fit?
By testing the founder’s unique insight, network, and execution proof against the market’s pain points.
Is carry taxed as capital gains?
In many jurisdictions yes, but tax reform debates can change this treatment.
What is a key‑person clause?
A contract term that halts new investments if named GPs depart or disengage.
Can GPs run multiple funds at once?
Yes, but they must manage conflicts and bandwidth, often through a tiered partnership structure.
How many GPs are typical per fund?
Two to four for emerging managers; larger franchises can have ten or more across sectors.
Do GPs co‑invest personally in portfolio rounds?
Often, subject to firm policy and conflict checks.
What is the hurdle rate?
The minimum return LPs receive before carry is paid, commonly eight percent.
How do GPs support portfolio talent needs?
By maintaining recruiter networks, creating operator councils, and hosting functional summits.
What happens when a deal goes bad?
The GP may negotiate down rounds, recapitalizations, or write the investment to zero and learn from it.
Are GPs liable for fund losses?
They have unlimited liability for legal and fiduciary breaches, though corporate structures and insurance mitigate financial risk.
What is platform support?
Services such as marketing, HR, or design offered by the firm to help startups accelerate.
Do founders ever become GPs?
Many successful founders transition into venture to leverage experience and networks.
How transparent are fund metrics to LPs?
Quarterly statements provide NAV and performance multiples, with yearly audits for verification.
What’s a mini‑fund strategy?
A GP raises a small opportunity vehicle to double down on winners without diluting the main fund’s reserves.
How is DPI different from TVPI for GPs?
DPI shows cash returned to LPs, directly affecting carry; TVPI includes unrealized value so it is not money in the bank yet.
Can GPs invest internationally?
Yes, but currency, legal, and cultural risks increase complexity and monitoring costs.
Why do some GPs focus on sector themes?
Specialization can sharpen deal flow and value add, making fundraising easier among LPs seeking exposure.
What is succession planning for a GP?
Establishing next‑generation partners and governance so the firm survives beyond its founders.
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