Limited partnership refers to an operating organization that allows more partners to assume limited liability on the basis that more than one partner assumes unlimited liability. The limited partnership system in venture capital is beneficial to the organic combination of incentive mechanism and constraint mechanism in venture capital. Limited partnership companies divide shareholders into limited liability and unlimited liability, which meets the needs of risk prevention of venture capital in terms of capital contribution, liability nature and income distribution. In the venture capital of limited partnership, the limited partners can invest and contribute by stages according to the partnership agreement, and they are required to ensure the safety of the investment principal. Because limited liability partners only bear limited liability in this kind of investment and do not directly manage funds, the specific investment activities of venture capital are the responsibility of general partners, that is, partners who bear unlimited liability for investment activities. This kind of investment risk is divided into unlimited liability and limited liability, which makes the partners who are specifically responsible for investment operation become unlimited liability bearers, so the change of investment income first affects the interests of operating partners. Moreover, if the investment institution is insolvent because of his wrong decision, the general partner must also use his other assets to make up for the losses, which makes its risks and benefits completely symmetrical, thus effectively weakening the moral hazard. Because the limited partnership system not only improves the credibility of venture capital institutions, but also allows many limited partners to bear limited liability and earn more. People's participation in venture capital can enlarge the limited capital invested by general partners and attract more funds to participate in venture capital, thus promoting the development of science and technology and industrial investment. In addition to the above aspects, according to the tax laws of all countries in the world, partnership enterprises, including limited partnership enterprises, do not levy enterprise income tax, because the law does not regard such enterprise organizations as independent economic entities. When a limited partnership company distributes income to each partner, the partners shall pay individual income tax according to law. It makes limited partnership have the advantage of tax reduction compared with general companies, so it is more attractive to people or institutional investors who are interested in venture capital. A limited partnership requires the business operator (i.e. the transaction executor, the same below) to invest capital in the enterprise and assume unlimited liability for the debts of the enterprise. When an enterprise loses money and can't fully repay its debts, it will also pay off its debts with its other properties, thus prompting it to pay more attention to the operating efficiency of the enterprise. Secondly, the limited partnership system allows operators to obtain the right to operate the enterprise at the expense of little capital investment (such as 1% of the total investment) and unlimited liability, so that venture capitalists and related scientific and technological personnel can participate in venture capital, and their small investment can play a role in amplifying capital. Limited partnership allows investors to subscribe for the capital they have invested. When an enterprise does not have a good investment project, its subscribed capital may not be available for the time being. However, when an enterprise chooses a good investment project, it can concentrate on investing capital, which will not only help to exert the effect of fund collection, but also avoid the risk of idle and waste of funds. For limited partners, they hope to get higher returns with their limited capital, but they are unwilling to assume unlimited responsibilities. Limited partnership can satisfy their wishes. As a form of partnership, limited partnership does not pay enterprise income tax according to the current tax policy, and the investment income is completely distributed to investors after necessary deduction, which can make limited partners get higher investment income than in limited liability companies or joint-stock companies. At the same time, because they only bear limited liability in this partnership, their responsibilities are equal to those in a limited liability company, but their income is higher than that in a limited liability company. At the same time, the unlimited responsibility of unlimited partners, their ability to find high-return investment projects, management experience and the charm of professional background can make other investors trust them to manage their funds, thus attracting more investors to participate in venture capital, thus promoting the development of science and technology and the whole national economy. Limited partner of equity investment is a company system, which is superior to the general company system and pays more attention to the benefit of enterprise investment. Foreign venture capital is more willing to adopt this form of partnership. The limited partner of equity investment is the best performance of limited capital to obtain the maximum benefit and bear relatively few responsibilities.

Legal objectivity:

Article 61 of the Partnership Enterprise Law: A limited partnership enterprise shall be established by two or more partners but not more than 50 partners; However, unless otherwise provided by law. A limited partnership enterprise shall have at least one general partner.