A Limited Partnership (L.P.) is a business or investment structure that brings together two distinct classes of participants:

  • General Partner (GP)—manages and controls the business or fund.
  • Limited Partners (LPs)—provide the capital but do not engage in day-to-day operations.

This structure offers limited liability for investors while giving managerial authority to the GP—the reason it has become the global standard for venture capital, private equity, and hedge funds.

Basic Structure

General Partner (GP)

  • Typically the fund manager or management company.
  • Executes investments, manages exits, and oversees compliance.
  • Holds unlimited liability for obligations of the partnership.

Limited Partners (LPs)

  • Institutional investors, pension funds, endowments, or family offices.
  • Contribute committed capital but do not participate in management.
  • Have limited liability—their exposure is capped at the invested amount.

How It Works

The fund’s operations are governed by a Limited Partnership Agreement (LPA), which sets out commitments, profit allocation, decision rights, and exit mechanics.

The General Partner acts and signs on behalf of the partnership.

The Limited Partners remain passive investors who receive returns proportional to the fund’s performance.

Example: Investment Fund Context

Consider Sequoia Capital Global Growth Fund, L.P.

  • “L.P.” denotes that it’s a Limited Partnership.
  • Registered, for instance, in Delaware (U.S.) or Cayman Islands.
  • General Partner: Sequoia Capital GP LLC (or its affiliate)—responsible for management.
  • Limited Partners: Global institutional investors, sovereign funds, and endowments providing capital commitments.

The fund invests in high-growth technology companies worldwide.

In such a structure, the General Partner invests and acts on behalf of the entire Limited Partnership, while the LPs participate financially but not operationally.

Where L.P.s Are Commonly Used

  • Delaware (U.S.)
  • Cayman Islands
  • Singapore
  • Luxembourg

These jurisdictions are preferred for their flexible partnership laws, tax transparency, and robust investor protection frameworks.

In Summary

A Limited Partnership combines centralized control by the General Partner with limited liability for investors, creating an efficient and globally recognized vehicle for institutional capital deployment.