What is a GP?
General partners are the VC firm's decision-makers. They raise the fund, source deals, make investment decisions, serve on boards, and work to generate returns for LPs.
GP Compensation
GPs earn management fees (salary and operations) plus carried interest (profit share). Partners typically have 5-25% of the carry pool depending on seniority and deal attribution.
GP Commitment
GPs invest 1-5% of fund size with their own money. This skin in the game aligns GP and LP interests. A partner investing $500K in a $100M fund shares the downside.
Formula
GP economics in a $100M fund:
- GP commitment: 2% ($2M, split among partners)
- Management fee: 2% ($2M/year for operations)
- Carry: 20% of profits (split among partners)
If fund returns 3x: $40M carry to split.
Example
VC firm has 4 partners raising Fund IV ($150M):
- GP commitment: $3M (2%), $750K each
- Carry split: 50% to senior partner, 20%, 20%, 10%
- If fund 3x returns, $60M carry:
- Senior: $30M, Others: $12M, $12M, $6M