After all, many times when we invest, a project needs to invest tens of millions or even hundreds of millions of dollars. The investment company's gp doesn't have that much money, or is unwilling to invest so much company money in a project in order to share risks. So LP was born.
GP: General Partner (GP) refers to two or more partners, and each partner is jointly and severally liable for the debts of the partnership organization with his own personal property. This is a narrow partnership.
After a series of procedures, LP gives its own money to GP, who takes LP's money to invest in the project to get profits from it, and then the two sides share the profits. This is the classic case of "you (LP) pay and I (GP) contribute" in real life.
In private equity investment funds, financiers usually act as LP and investors as GP. According to the established rules of venture capital and private equity financing industry, LP generally does not participate in the specific investment management affairs of private equity funds, while GP exists as a professional fund manager. In addition to collecting management fees, they also enjoy a certain percentage of profits according to the limited partnership contract.