GP commitment
Last updated
Quick Answer
The GP commitment is the manager's own capital invested in the fund alongside limited partners.1,2
What it is
It exists for alignment: the manager's money is exposed to the same outcomes as its investors'. It is a small fraction of total fund size, and how the manager funds its share — cash, or a waiver of management fee — is itself a negotiated point, because the two are not economically equivalent from a limited partner's perspective.1,2
Operational context
What good looks like
Why It Matters
It is the alignment term limited partners diligence first, and how the manager funds its share — cash, or a waiver of management fee — changes what that alignment is actually worth.1
Term Family
Related concepts
Related Questions
Browse all questions →Frequently Asked Questions
What is GP commitment in venture capital?
It exists for alignment: the manager's money is exposed to the same outcomes as its investors'. It is a small fraction of total fund size, and how the manager funds its share — cash, or a waiver of management fee — is itself a negotiated point, because the two are not economically equivalent from a...
Why is GP commitment important for startups?
Understanding GP commitment is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.ilpa-principles-3 — ILPA Private Equity Principles 3.0 (2019)ILPA Private Equity Principles 3.0 (2019)ILPA(The GP commitment is the manager's own capital invested in the fund alongside limited partners.)primary · T1 · fees-economics · structure
- 2.ilpa-model-lpa-wof-ts — ILPA Model LPA Term Sheet — Whole-of-Fund Waterfall Version (July 2020)ILPA Model LPA Term Sheet — Whole-of-Fund Waterfall Version (July 2020)ILPA(The GP commitment is the manager's own capital invested in the fund alongside limited partners.)primary · T1 · fees-economics · structure
- 3.preqin-pro-glossary — Preqin Pro Glossary of TermsPreqin Pro Glossary of TermsPreqin (BlackRock)(The GP commitment is the manager's own capital invested in the fund alongside limited partners.)secondary · T2 · fees-economics · structure
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