Definition by the book
A limited partner is a part-owner of a company whose liability for the firm's debts cannot exceed the amount that an individual invested in the company. The limited partner invests money in exchange for shares in the partnership but, has restricted voting power on company business and no day-to-day involvement in the business.
Limited partnership by definition has at least one general partner and one limited partner.
What it really means
It's essentially the investor's investor. Usually, LPs will be angel investors, family offices, high net-worth individuals for the small funds as well as pension funds, larger corporates, or investment firms for larger funds. The LP invests money but, usually doesn't have any day to day operational tasks in running a VC firm.
Limited partners aren’t personally liable (responsible) for the business and their involvement is strictly monetary and limited to the money they decided to invest.
Learn more
- https://www.thebalancesmb.com/what-is-a-limited-partnership-for-a-business-398326
- https://www.ionos.com/startupguide/get-started/limited-partnership/
- https://www.startups.com/library/expert-advice/limited-partnership
- https://vcpreneur.com/vc-funds-101-understanding-venture-fund-structures-team-compensation-fund-metrics-and-reporting-152b02e8504a