{"id":1370,"date":"2017-02-07T00:00:00","date_gmt":"2017-02-07T00:00:00","guid":{"rendered":"http:\/\/www-staging.carta.com\/sg\/blog\/the-ownership-graph-introduction\/"},"modified":"2021-03-05T06:58:52","modified_gmt":"2021-03-05T06:58:52","slug":"the-ownership-graph-introduction","status":"publish","type":"post","link":"https:\/\/www-staging.carta.com\/sg\/blog\/the-ownership-graph-introduction\/","title":{"rendered":"The Ownership Graph: Introduction"},"content":{"rendered":"\n

This is the first in a series of Carta<\/a> posts on the ownership graph.<\/em><\/p>\n\n

Let\u2019s say you start a company called Meetly. You hire employees and raise money from investors. A few years in, Meetly\u2019s ownership might look like this:<\/p>\n\n

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Let\u2019s take a closer look at investor Krakatoa Ventures.<\/p>\n\n

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Krakatoa Ventures is the name of the venture capital firm, but the firm isn\u2019t a legal entity. The entity that owns 20% of Meetly is called a fund.<\/p>\n\n

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Krakatoa Ventures Fund VII, L.P. owns 20% of Meetly. It also owns pieces of other companies:<\/p>\n\n

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Funds are pooled investment vehicles, meaning multiple parties invest together as one group.<\/p>\n\n

It can be better to invest as a group versus individually. Together, you can buy more ownership, more information, and more influence.<\/p>\n\n

Investors back venture capital funds for those reasons but also because the fund manager has expertise, access, and time that fund investors may not have.<\/p>\n\n

So who owns the fund?<\/p>\n\n

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The fund is owned by its partners. General partners (GPs) run day-to-day operations and have personal liability for the fund. Limited partners (LPs) are more passive participants in the fund. Their participation is typically limited to their capital commitment.<\/p>\n\n

In many funds, the GPs only provide 1% of the capital and the LPs provide 99%.<\/p>\n\n

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LPs can be divided into two groups: individuals and institutions.<\/p>\n\n

High net worth individuals invest in funds. These often are friends and family of the GPs or technology executives reinvesting their wealth into a new generation of companies.<\/p>\n\n

The LPs that typically invest the most in a fund are institutional investors. These are entities that own part of the fund on behalf of an organization.<\/p>\n\n

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Some examples of major types of institutional investors include:<\/p>\n\n