General Partner
The entity in a limited partnership that manages the fund, makes all investment decisions, and bears unlimited liability for the partnership’s obligations.
Definition
The general partner (GP) is the party in a limited partnership responsible for managing the fund: making investment decisions, executing trades, hiring service providers, and running day-to-day operations on behalf of all investors. In exchange for that role, the GP typically earns a management fee on assets under management and a share of profits known as carried interest.
Structurally, "the GP" is almost always a purpose-formed entity — commonly an LLC — rather than an individual, even though a limited partnership statute technically imposes unlimited liability on the general partner for the fund’s obligations. Using an LLC as the GP entity confines that unlimited liability to the entity itself, shielding the individual principals’ personal assets, while a separate management company entity is often used to employ staff and hold the investment management agreement.
The GP is the counterparty every limited partner contracts with under the limited partnership agreement, and it is the party that stands behind representations made in the private placement memorandum and any due diligence questionnaire investors request during onboarding.
Why it matters
The GP/LP split is what makes a fund investable at all for passive capital: it lets LPs commit capital and share in gains and losses without taking on management responsibility or the unlimited personal liability that would come with actively controlling the partnership’s business.
The GP's economics — management fee and carried interest — are the primary mechanism aligning manager incentives with investor outcomes, which is why LPs scrutinize GP terms (fee levels, hurdle rate, clawback provisions) closely during due diligence rather than treating them as fixed industry boilerplate.
Common mistakes
Assuming the GP is a natural person rather than an entity — in nearly every modern fund, the GP is an LLC or similar limited-liability vehicle formed specifically to hold that role, precisely to contain the statutory unlimited liability of general partner status.
Confusing the GP entity with the management company — many fund structures separate the two: the GP holds the legal general-partner role and receives carried interest, while a separate management company employs staff and receives the management fee, for tax and liability reasons.
Treating GP economics as fixed across every fund — management fee rates, carried interest percentages, and terms like hurdle rates and clawback provisions vary by fund and are negotiated, sometimes investor-by-investor through side letters.
Assuming a GP's fiduciary duty to the fund eliminates conflicts of interest automatically — GPs typically retain broad discretion under the partnership agreement, which is exactly why LPs rely on governance provisions, reporting rights, and due diligence rather than fiduciary duty alone.
In practice
For a crypto fund, the GP is the entity that ultimately authorizes trading decisions, exchange and wallet connections, and any changes to fee terms with LPs — every dealing action, fee-term change, and distribution in a well-run fund traces back to an explicit GP approval rather than happening automatically.
Because crypto funds are frequently solo-GP or two-person operations, the separation between GP entity and management company is sometimes collapsed for simplicity in the earliest stage of a fund’s life, with the full split introduced as the fund scales and adds outside capital or staff.
Questions, answered
What is a general partner in a fund?
The general partner (GP) is the party in a limited partnership responsible for managing the fund — making investment decisions and running operations — in exchange for a management fee and a share of profits called carried interest.
Is the general partner personally liable for the fund’s debts?
A limited partnership statute technically imposes unlimited liability on the general partner, but in practice the GP role is almost always held by a limited-liability entity such as an LLC, which confines that liability to the entity rather than the individual principals behind it.
What is the difference between a GP and a management company?
The GP holds the legal general-partner role in the limited partnership and typically receives carried interest; a separate management company entity often employs staff and receives the management fee. Some funds combine the two, especially at an early stage.
How does a general partner get paid?
A GP is typically compensated through a management fee, usually a percentage of assets under management charged regardless of performance, and carried interest, a share of profits above any hurdle rate or high-water mark.
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