Glossary - LP

LPs or Limited Partners serve as the primary source of capital into a venture fund, and GPs or General Partners serve to manage the fund and execute investments with the capital in order to return that capital to the LPs.

What that means is that if a VC fund were a startup, the LPs are sort of like the VCs for the fund. Just like VCs watch over the investment by being board members and active participants in the growth of a startup, LPs watch over their investment in a VC fund by certifying investment choices and overseeing the fund's growth in hiring new partners, selecting other critical members of the investment team, etc.