Definition

Limited Partner, the institutional investors and wealthy individuals who provide capital to VC funds, essentially the VCs' VCs. They're the puppetmasters who rarely appear but whose capital enables the whole show.

Example Usage

Our VC is raising their next fund and spending half their time on the road pitching LPs instead of helping portfolio companies.

Origin

Limited partnership structure from partnership law

Fun Fact

LPs include pension funds, university endowments, and family offices who collectively provide the hundreds of billions powering the startup ecosystem.

Source: Partnership law and fund structure terminology

Related Terms

Beginner

outbound sales

A proactive sales approach where the company reaches out to potential customers rather than waiting for inbound interest. It's the difference between fishing with a net and hoping fish jump into your boat.

🚀 Startup / VC
Intermediate

dilution

The soul-crushing moment when a startup issues new shares, and existing shareholders watch their ownership percentage shrink faster than a wool sweater in a hot dryer. While you still own the same number of shares, you now own a smaller slice of the pie—assuming the company actually grows enough to justify the dilution. It's the price founders pay for other people's money, and the reason early employees cry into their vested options.

🚀 Startup / VC
Advanced

ratchet

An anti-dilution mechanism that adjusts an investor's equity stake if the company raises money at a lower valuation, protecting them from down rounds. Full ratchet is brutal; weighted average is gentler.

🚀 Startup / VC
Advanced

party to the exit

A shareholder who has contractual rights to approve or block an acquisition or IPO, giving them veto power over exit decisions regardless of ownership percentage. Democracy in action, if democracy meant a small group could overrule the majority.

🚀 Startup / VC
Beginner

graduation

When a startup 'grows up' from an accelerator program or moves from seed to institutional funding, like leaving college but with more awkward Demo Days. Implies you're now playing with the big kids.

🚀 Startup / VC
Advanced

participating preferred

Preferred stock that gets both its money back first AND participates in remaining proceeds with common stockholders. The 'have your cake and eat it too' of liquidation preferences.

🚀 Startup / VC

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