Who supplies the money
As in private equity, nobody at a VC firm is investing only their own money. Limited Partners (LPs), pension funds, university endowments, sovereign wealth funds, family offices, commit capital to a fund and mostly stay out of individual deal decisions. General Partners (GPs) are the VC firm itself: they raise the fund, decide what to invest in, sit on boards, and are accountable for the return.
Who else is in the room
Founders run the company and, unlike a PE portfolio company's existing management, are almost always the same people who started it and will keep running it for years. Co-investors, other VC firms investing in the same round, matter more in venture than in PE: most rounds have several investors, and a strong co-investor's presence is itself a signal worth reading. Service providers, startup-focused lawyers, recruiters, and accountants, round out the ecosystem, often recommended by the VC firm itself.
One more group is specific to venture: scouts and angels, individuals who invest small amounts pre-institutionally and often feed deal flow to the funds that follow them in, a channel Lesson 5 covers directly.
| Fee | Typical rate | Charged on |
|---|---|---|
| Management fee | ~2%/year | Committed capital |
| Carried interest ("carry") | ~20% | Profits above the hurdle |
| Hurdle rate | 0-8%/year | Minimum LP return before carry kicks in, often waived at seed |
Checkpoint
- Limited Partner (LP): supplies capital, largely hands-off.
- General Partner (GP): the VC firm; picks deals, sits on boards, is accountable for the return.
- Founders: run the company, almost always the same people who started it.
- Co-investors: other VC firms in the same round; their presence is itself a signal.
If anything here still feels unclear, ask before moving to Lesson 3.