Limited partner (LP)
What is it?
Se refiere a un socio limitado en una sociedad de responsabilidad limitada, como un fondo de inversión. Refers to a limited partner in a limited liability partnership, such as an investment fund. Limited partners (LPs) contribute capital to the fund, but have limited responsibility regarding the debts and obligations of the fund. This means their liability is limited to the amount of their investment, and they cannot be held responsible for debts beyond that amount.
LPs are usually investors who seek participation in the fund without having an active role in its daily management. Management and strategic decisions are made by the general partners (GPs), who are responsible for managing the fund and making the investment decisions.
Key aspects to consider
In an investment fund, limited partners are essential for providing the necessary capital for the fund to make its investments. In exchange for their investment, LPs may receive a share of the profits generated by the fund, according to the terms established in the partnership agreement.
One of the main advantages for LPs is the limitation of their liability, meaning their risk is restricted to their capital contribution. However, this also means that LPs do not have direct control over the fund’s decisions nor do they participate actively in its management.
This model is common in venture capital funds, hedge funds, and other collective investment vehicles, where LPs provide the capital and GPs handle the management and investment decisions.