GP clawback
Last updated
Quick Answer
A GP clawback is the general partner's obligation to return carried interest it has already received, when the fund's final results show it was overpaid.1,2
What it is
It arises where carry was distributed deal by deal and later investments performed badly enough that, measured across the whole fund, limited partners did not receive their capital and preferred return. The calculation is performed at the end of the fund's life and reconciles what the general partner actually received against what the waterfall says it should have received overall.1,2
Operational context
What good looks like
Why It Matters
The clawback is what makes deal-by-deal distribution defensible to limited partners. Whether it is enforceable in practice depends entirely on the security behind it.1
Common mistakes
Term Family
Frequently Asked Questions
What is GP clawback in venture capital?
It arises where carry was distributed deal by deal and later investments performed badly enough that, measured across the whole fund, limited partners did not receive their capital and preferred return.
Why is GP clawback important for startups?
Understanding GP clawback 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-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(A GP clawback is the general partner's obligation to return carried interest it has already received, when the fund's final results show it was overpaid.)primary · T1 · vesting-clawback · term
- 2.ilpa-model-lpa-wof — ILPA Model Limited Partnership Agreement — Whole-of-Fund Waterfall (July 2020)ILPA Model Limited Partnership Agreement — Whole-of-Fund Waterfall (July 2020)ILPA(A GP clawback is the general partner's obligation to return carried interest it has already received, when the fund's final results show it was overpaid.)primary · T1 · vesting-clawback · term
- 3.ilpa-principles-3 — ILPA Private Equity Principles 3.0 (2019)ILPA Private Equity Principles 3.0 (2019)ILPA(A GP clawback is the general partner's obligation to return carried interest it has already received, when the fund's final results show it was overpaid.)primary · T1 · vesting-clawback · term
- 4.duanemorris-clawbacks — Private Equity Funds: Clawbacks and Investor GivebacksPrivate Equity Funds: Clawbacks and Investor GivebacksDuane Morris LLP(A GP clawback is the general partner's obligation to return carried interest it has already received, when the fund's final results show it was overpaid.)secondary · T2 · vesting-clawback · term
- 5.goodwin-lp-clawback-2025 — Convergence and Flexibility: LP Clawback Provisions in Private Funds (July 2025)Convergence and Flexibility: LP Clawback Provisions in Private Funds (July 2025)Goodwin Procter LLP(A GP clawback is the general partner's obligation to return carried interest it has already received, when the fund's final results show it was overpaid.)secondary · T2 · vesting-clawback · term
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