The anatomy of a modern fund structure

Authors:

Rita Astoor, Josephine Koh

Read time:

4 minutes

Published date:

3 December 2025

Thinking of starting your own venture capital fund? Learn the legal vocabulary of VC fund structures, including LPs, GPs, LPAs, and VCCs.

Limited Partnership

The core structure of most venture capital and private equity funds is a limited partnership. A limited partnership is made up of at least one general partner (GP) and at least one limited partner (LP) who do business together.

The GPs and LPs of a limited partnership can be individual people or legal entities.

General partner (GP)

Typically, the GP of a venture capital or private equity fund is a legal entity established and run by people employed by the fund manager firm. In any limited partnership, the GP manages the partnership.

As a result, the GP has unlimited liability for the partnership’s business operations. In other words, the GP assumes full responsibility for any business debts or legal liabilities.

Limited partner (LP)

With a venture capital or private equity fund, a limited partner is the investor who supplies the capital. These LPs can be individuals or legal entities. Often, LPs consist of institutional investors, such as pension funds, college endowments, trusts, insurance companies, health care systems, family offices, sovereign wealth funds as well as high net-worth individuals. Sometimes, venture capital or private equity firms also make investments into other funds as LPs.

LPs have limited liability in the partnership because they don’t take part in directing its business operations and remain passive investors. When a limited partnership has debts or legal liabilities, the amount that LPs are responsible for is typically limited to their investment amounts in the partnership, and does not extend to their assets outside the partnership. (The GP, on the other hand, would be on the hook for the full amount.)

GP vs. LP

The limited partnership agreement (LPA)

A limited partnership agreement (LPA) spells out what GPs and LPs can and can’t do in a limited partnership.

This agreement includes rules for things like:

• How someone becomes or is removed as a partner
• What rights each partner has
• What the scope of their activities may be
• How investors make contributions to the partnership
• How the partnership will distribute investment proceeds
• How votes will be conducted

Partnership interests

The LPA also specifies partnership interests, which is the amount of the partnership each GP and LP owns. This percentage is usually relative to each partner’s contribution to the partnership.

Amended and restated LPA

An existing LPA can be modified by passing an amendment that adds, deletes, or modifies its terms. The partnership is then governed by the amended LPA. Partners can also discard the whole LPA (and any amendments to it) by replacing it with an entirely new agreement known as an amended and restated LPA. As of the date it’s enacted, the entity is then governed only by the amended and restated LPA (which is known as the A&R LPA).

What is a Variable Capital Company (VCC)?

In 2020, Singapore introduced the Variable Capital Company (“VCC”), a new legal structure for investment funds, which has been widely used by both venture capital and private equity funds in the region.

The VCC legislation is administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA), and all VCCs must be managed by a regulated fund manager in Singapore. The anti-money laundering and anti-terrorism obligations of VCCs will come under the purview of the Monetary Authority of Singapore (MAS).

Fund managers would consider setting up VCCs due to the flexible nature of issuing and redeeming shares as well as to pay dividends. Another factor is the cost efficiencies that the fund managers would enjoy—a VCC can be set up as a single standalone fund or an umbrella fund with two or more sub-funds, each holding a portfolio of segregated assets and liabilities.

Setting up your fund with Carta

There are many ways to start a fund management firm and set up a fund. You might need to add even more layers of structure to accommodate regulatory rules, different types of investors (like tax-exempt investors), or entities formed in different jurisdictions, among other factors.

Carta can guide you through designing a fund structure that makes sense for you. We work with seasoned and established business partners to help managers form entities, understand key concepts in their entity documents, open bank accounts and obtain tax identification numbers for FATCA/CRS.

By making sure your legal fund structure is set up to facilitate your investment goals, you can set your fund up for long-term success.

Author: Rita Astoor

Rita Astoor is the Director of Carta’s Venture Capital & Private Equity Business Development team. She also teaches a course on Venture Funds at UC Berkeley School of Law. Prior to joining Carta, Rita was a practicing investment fund attorney.

Author: Josephine Koh

Josephine Koh is the Senior Director of Customer Experience, Funds for Asia Pacific, Middle East & Africa at Carta, and has over 20 years of experience in the asset management industry. She was an integral member of the international expansion team when Carta launched its first international office in 2021, building the fund administration book of business. Prior to joining Carta, she was the co-founder and COO at Insignia Venture Partners.