In the field of funds, there are two words, one is LP and the other is GP. These two words describe the partners in a partnership, but there are some differences between them. What's the difference between LP and GP?

The difference between LP and GP of funds

1. Different definitions: LP means LimitedPartner and Chinese means Limited Partner. GP means general partner, which means general partner in Chinese.

2. Different proportion of capital contribution: Limited partners mainly invest, and the proportion of capital contribution of limited partners is generally 99%, and the proportion of GP is 1%.

3. Different responsibilities: LP bears limited responsibilities to investment companies and enterprises with the capital contribution as the upper limit; And GP's responsibility is unlimited.

4. Different investment methods: LP limited partners invest 99% of the capital, even 100%. Sometimes GP doesn't need to invest a penny in VC, but is only responsible for management. LP just needs to put the money in and sit still.

5. The sharing mode is different: GP contributes and LP pays. Therefore, when sharing, even if GP invests little or no capital, GP can get a 20% share, while LP only gets 80% even if VC is the basic investment. Note that 20% and 80% here are only approximate values. In practice, it depends on the sharing mode in VC protocol.