For a small, specialized EnergyTech fund, the LPA should give the GP **measured flexibility**, not unlimited discretion.
- **Investment strategy:** keep the core thesis fixed: sector, stage, geography, and broad check size. Allow modest expansion into clearly adjacent areas as the market evolves.
- **Fund duration:** standard term plus extension rights is typical, often with GP or LPAC approval for extensions.
- **Portfolio construction:** permit some flexibility on pacing, ownership targets, and reserves, but set concentration limits.
Good guardrails:
- max exposure per company, often around **10%** of commitments
- clear sector/geography boundaries
- defined amendment and approval mechanics
For small funds, too many rigid restrictions can hurt performance; too much discretion can weaken LP trust.
References:
- https://decilehub.com/base/1-general_questions/21287-what-are-the-specific-limits-on-the-gp-s-discretion-in-making-investments-are-there-any-sector-geography-or-check-size-restrictions-that-must-be-followed
- https://decilehub.com/base/1-general_questions/19718-define-the-following-lpa-term-maximum-portfolio-investment
- **Investment strategy:** keep the core thesis fixed: sector, stage, geography, and broad check size. Allow modest expansion into clearly adjacent areas as the market evolves.
- **Fund duration:** standard term plus extension rights is typical, often with GP or LPAC approval for extensions.
- **Portfolio construction:** permit some flexibility on pacing, ownership targets, and reserves, but set concentration limits.
Good guardrails:
- max exposure per company, often around **10%** of commitments
- clear sector/geography boundaries
- defined amendment and approval mechanics
For small funds, too many rigid restrictions can hurt performance; too much discretion can weaken LP trust.
References:
- https://decilehub.com/base/1-general_questions/21287-what-are-the-specific-limits-on-the-gp-s-discretion-in-making-investments-are-there-any-sector-geography-or-check-size-restrictions-that-must-be-followed
- https://decilehub.com/base/1-general_questions/19718-define-the-following-lpa-term-maximum-portfolio-investment