Limited Partner (LP)

Who actually puts up the money?

When a venture capital or private equity fund in India announces a ₹500 crore corpus, that money is not the fund manager's own. It comes from limited partners (LPs) — the investors who write the cheques but stay out of the driver's seat.

The manager who runs the fund is the *general partner (GP)*. The LP is the silent backer: contractually committed, financially exposed, but operationally hands-off.

How LPs work in India's AIF structure

In India, most professional funds are set up as Alternative Investment Funds (AIFs) registered with SEBI. The LP role maps onto an AIF investor or contributor.

Three features define the LP:

- Limited liability. An LP can lose only what it commits — personal or institutional assets beyond that are not on the hook. - No management role. LPs don't pick portfolio companies or sign deals; taking active control would risk their limited-liability protection. - Commitment, then drawdowns. An LP commits a sum upfront, and the GP calls it in tranches as deals close.

SEBI sets a high entry bar. The minimum investment to participate in an AIF is generally ₹1 crore, and Category I AIFs (which house venture capital funds) must reach a minimum corpus of ₹20 crore. This is deliberately an instrument for wealthy individuals, family offices, and institutions — not retail savers.

Who the LPs are

Indian LPs include domestic family offices, HNIs, banks, insurers, corporate treasuries and increasingly global institutions and sovereign funds backing India-focused funds. Fund tenure is fixed upfront, and extensions typically need consent from a supermajority of LP commitments — one of the few levers LPs hold.

The practical takeaway

Becoming an LP means trusting a GP with locked-in, illiquid capital for years in exchange for a share of profits. Returns can be high, but so is the entry threshold and the illiquidity. For most Indians, mutual funds and listed equities remain the accessible route; LP status is the league above.