Fund of Funds (FOF)

The General Partner is the entity (typically the fund management firm or its affiliate) responsible for managing a private equity or venture capital fund, making investment decisions, and handling day-to-day operations. The GP bears unlimited liability for the fund’s obligations and earns management fees and carried interest in exchange for managing LP capital.

A Limited Partner is an investor in a private equity or venture capital fund who contributes capital but does not participate in the fund’s management or investment decisions. LPs enjoy limited liability (their exposure is capped at their capital commitment) and include pension funds, sovereign wealth funds, endowments, insurance companies, family offices, and high-net-worth individuals.

GP Commitment is the capital that the General Partner (or its principals) commits to the fund alongside LPs, typically ranging from 1% to 5% of total fund size. This “skin in the game” aligns the GP’s economic interests with those of the LPs and is a standard term evaluated by institutional investors during fund due diligence.

A capital call (also called a drawdown) is a formal demand issued by the GP to LPs requiring them to transfer a portion of their unfunded capital commitment to the fund, typically to finance new investments, pay fees, or cover fund expenses. LPs generally have 10 to 15 business days to fund a capital call after receiving a drawdown notice.