GP Commitment - General Partner's Own Capital Contribution
Recording the GP's mandatory co-investment (typically 1%–3% of total fund commitments) contributed alongside LP capital to align incentives, known as the GP commitment or 'skin in the game'.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash & Cash Equivalents | Asset (+) | 2,000,000.00 | - |
| GP Capital Account - Committed Capital | Equity (+) | - | 2,000,000.00 |
💡 Accountant's Note
The GP (or its principals) must contribute a minimum percentage of fund commitments (often 1%–5%) as their own 'skin in the game.' This aligns GP and LP interests. The GP capital is subject to the same call and distribution waterfall as LP capital but typically receives a proportionate share of carried interest (since the GP is also an LP in its own fund). Institutional LPs increasingly require higher GP commitments.
Practitioner & Systems Framework
💻 ERP Architecture
The GP capital account is maintained separately from LP capital accounts in the fund's books. GP capital calls are processed on the same schedule as LP capital calls (pro-rata to commitment). The GP's capital is at risk alongside LP capital — losses reduce the GP capital account first in some LPA structures.
⚠️ Audit Flags
Auditors verify the GP has funded its committed percentage by examining wire transfer confirmations and reconciling to the LP register. Under-funding of the GP commitment is a breach of the LPA.
📄 Required Documentation
LPA GP commitment provisions, GP commitment capital call notices, wire transfer confirmations from GP or its principals, GP capital account statement.
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