Yes. The obvious risk is letting an LP act like a manager, but “hidden” breach paths usually involve giving an LP rights or roles that look like **control**.
Watch for:
- giving an LP veto or approval rights over investments, exits, valuations, or day-to-day operations
- letting an LP serve in a compensated Venture Partner / advisory role tied to investment decisions
- involving an LP in manager-level committees rather than a narrow LPAC role
- delegating GP functions informally by email or side letter
- creating side letters that give one LP governance-like control
- asking LPs to direct fund actions instead of keeping them passive
Best practice:
- keep LP input non-binding
- route conflicts through the LPA / LPAC process
- have counsel review side letters and unusual LP roles
References:
- https://decilehub.com/base/1-general_questions/1760-same-lp-venture-partner-compensation
- https://decilehub.com/base/1-general_questions/163952-on-side-letters-in-8-3-cornerstone-lpa
Watch for:
- giving an LP veto or approval rights over investments, exits, valuations, or day-to-day operations
- letting an LP serve in a compensated Venture Partner / advisory role tied to investment decisions
- involving an LP in manager-level committees rather than a narrow LPAC role
- delegating GP functions informally by email or side letter
- creating side letters that give one LP governance-like control
- asking LPs to direct fund actions instead of keeping them passive
Best practice:
- keep LP input non-binding
- route conflicts through the LPA / LPAC process
- have counsel review side letters and unusual LP roles
References:
- https://decilehub.com/base/1-general_questions/1760-same-lp-venture-partner-compensation
- https://decilehub.com/base/1-general_questions/163952-on-side-letters-in-8-3-cornerstone-lpa