LP giveback
Last updated
Quick Answer
An LP giveback obligates limited partners to return distributions they have received, so the fund can meet its own obligations.1,2
What it is
Where a fund faces an indemnity claim or another liability after distributing proceeds, a giveback provision allows it to recall capital from limited partners. It is bounded — typically by a cap on the proportion of distributions recallable and by a limitations period after which no recall is possible — and those two bounds are the substance of the provision.1,2
Operational context
What good looks like
Why It Matters
A giveback means a distribution received is not necessarily a distribution kept, and the cap and the limitations period are the two terms that decide how provisional a limited partner's money really is.1
Term Family
Related concepts
Frequently Asked Questions
What is LP giveback in venture capital?
Where a fund faces an indemnity claim or another liability after distributing proceeds, a giveback provision allows it to recall capital from limited partners.
Why is LP giveback important for startups?
Understanding LP giveback 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(An LP giveback obligates limited partners to return distributions they have received, so the fund can meet its own obligations.)primary · T1 · vesting-clawback · structure
- 2.ilpa-principles-3 — ILPA Private Equity Principles 3.0 (2019)ILPA Private Equity Principles 3.0 (2019)ILPA(An LP giveback obligates limited partners to return distributions they have received, so the fund can meet its own obligations.)primary · T1 · vesting-clawback · structure
- 3.ilpa-fund-terms-2021 — Industry Intelligence Report — "What's Market in Fund Terms?" (2021)Industry Intelligence Report — "What's Market in Fund Terms?" (2021)ILPA(An LP giveback obligates limited partners to return distributions they have received, so the fund can meet its own obligations.)primary · T1 · vesting-clawback · structure
- 4.duanemorris-clawbacks — Private Equity Funds: Clawbacks and Investor GivebacksPrivate Equity Funds: Clawbacks and Investor GivebacksDuane Morris LLP(An LP giveback obligates limited partners to return distributions they have received, so the fund can meet its own obligations.)secondary · T2 · vesting-clawback · structure
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