Limited partnership

Legal structure used by most venture and private equity funds that usually consists of a general partner (the management firm which has unlimited liability) and limited partners (the investors, who have limited liability and are not involved with day-to-day operations). The general partner receives a management fee and a percentage of the profits. The limited partners receive income, capital gains, and tax benefits. Using policies spelled out in a partnership agreement including terms, fees and structures, the general partner manages the partnership.