Sublime

If those investors received their money from several different sources who did not directly own a percentage of the portfolio companies, then those individuals are venture capitalists and they are receiving money from limited partners (these are endowments, foundations, public pensions, high net worth individuals etc.).

Once the limited partners receive 100 percent of their money back, Cynthia and Mercedes receive 20 percent of any additional profits while the limited partners receive 80 percent. The 20 percent that Cynthia and Mercedes receive is referred to as carried interest.

The owners who provide most of the capital to the business are the limited partners (LPs). They are called “limited partners” because their liability is limited to their investment. If they invest $100,000, then $100,000 is all they can lose as passive investors in the partnership.

to form a limited partnership, there still has to be at least one general partner (GP), who, as we just saw, has personal liability for debts and lawsuits associated with the business. But a limited partnership then has limited partners (LPs) who maintain limited liability status, meaning they can only lose what they invest into the business.