GP Commitment

Definition

GP commitment is the manager’s own capital invested into the fund alongside LPs. It is typically expressed as a dollar amount and/or a percentage of total commitments. The purpose is alignment: when the GP has real capital at risk, incentives shift toward protecting downside, preserving reputation, and prioritizing long-term fund outcomes over short-term fee economics. Allocator Context Allocators treat GP commitment as a credibility signal, but they underwrite it with nuance. The questions are rarely “is there a commitment?” — they are how meaningful is it and what is the source. A GP commitment financed through loans or recycled economics can still provide alignment, but it is not viewed the same as unencumbered GP capital. Allocators also consider whether commitment is consistent across the platform (e.g., across funds, strategies, and partners) and whether it matches the decision-making power of the people running the portfolio. Decision Authority GP commitment is reviewed in IC memos and legal diligence, and it can influence sizing and approval comfort—especially for emerging managers. While it’s rarely a standalone “yes/no” factor, a commitment that feels token can raise broader questions about alignment, economics, and governance discipline. Why GP Commitment Matters for Fundraising It reduces perceived agency risk. LPs want confidence the GP will treat capital like long-term reputation, not short-term fee base. Clear disclosure (amount, source, lock-in) also prevents late-stage legal churn. Key Takeaways GP commitment is an alignment mechanism, not marketing Source and meaningfulness matter Often influences IC comfort and ticket sizing Clear disclosure helps closes move faster