A limited partner (LP) is an investor in a private fund who commits capital but does not participate in the day-to-day management of the fund. LPs have limited liability — their maximum loss is capped at the amount they have committed. In exchange for this passivity, LPs receive the economic benefit of the fund's investments net of fees and carried interest.
LPs in private equity and venture capital funds include pension funds, sovereign wealth funds, endowments, insurance companies, family offices, high-net-worth individuals, and fund of funds. In Southeast Asia and Australia, superannuation funds have become increasingly important LPs in regional private markets funds, driven by the need to diversify into higher-yielding alternative asset classes.