Limited Partners (LPs) are the foundation of most venture funds, providing the capital for fund investments in deals.
What Is A Limited Partner Description?
A limited partner is a person or a business that injects capital into the venture capital fund but does not participate in its promotion. LPs invest in the fund’s corpus with the expectation of generating returns from the fund’s investments in different startups and fast-growing companies. These LPs are referred to as passive investors because they do not actively participate in the affairs of the venture and have minimal exposure to any debts the venture undertakes.
What Advantages Come With Being A Limited Partner?
Portfolio Diversity: Having a collection of investments in various businesses and emerging markets helps in managing risks and increasing the chances of better returns.
Access High Growth Startups: This includes investing in transformative startups that have a tremendous potential for expansion.
Limited Personal Obligations: There is no personal responsibility for the debts or obligations of the fund.
Prospective: Opportunity of capturing the companies within the portfolio that become successful yields an opportunity for good returns.
What Are The Forms Of Limited Partners?
In the scope of Venture Capital the LPs can be divided into three categories:
Individuals: This is made up of high net worth individuals (HNIs) who deploy their own capital into a VC fund. They can also choose to be angel investors and put money in startups directly.
Institutional LPs: These are entities that have substantial capital with the intention of making profits in future periods. This group includes pension funds, endowments, foundations, and corporates.
Family Offices: Like individuals, family offices venture into direct funding of startups alongside their activities in VC funds.
Want to become Overseas Capital Limited Partner/Investor?
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Email us at: hello@overseas.vc or info@overseas-capital.com