Fund Structure
LP Advisory Committee (LPAC)
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Quick Answer
A committee of selected LPs that reviews and approves potential conflicts of interest and other sensitive fund decisions.
What it is
An LP Advisory Committee (LPAC) is a subset of a fund's limited partners who serve in an oversight capacity, reviewing situations where the GP may have conflicts of interest. Common LPAC matters: approving investments where the GP has a personal relationship with founders, reviewing co-investment opportunities, approving fund extensions, consenting to key person transitions, and reviewing any side letters or special terms given to other LPs. LPACs don't make investment decisions (that's the GP's role) but serve as governance guardrails. Membership is typically offered to the fund's largest LPs. Being on an LPAC gives LPs additional visibility and influence — and a fiduciary responsibility to other LPs in the exercise of that role.
In Practice
When Sequoia Capital's Fund XX considers co-investing alongside their portfolio company Stripe in a major acquisition, they must present this potential conflict to their LPAC. The committee, consisting of representatives from CalPERS, Yale Endowment, and Sovereign Wealth Fund ABC, reviews the transaction details and votes on whether to approve the co-investment. Since Sequoia stands to benefit from both their direct investment and their fund's participation, the LPAC ensures this serves LP interests and isn't just favorable to the GP.
Operational context
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Why It Matters
LPAC oversight protects LPs from GP conflicts of interest and ensures fund decisions serve investor interests rather than just GP preferences. Without proper LPAC governance, GPs could make self-serving decisions around valuations, co-investments, or fund extensions that benefit their economics at LP expense. For GPs, having a well-functioning LPAC builds trust and credibility, making future fundraising easier and reducing potential legal disputes.
VC Beast Take
Most LPs don't realize how much power they're giving up by accepting ceremonial LPAC roles. The best LPs use these seats strategically, pushing for transparency on valuation markups and questioning GP conflicts before they become problems. Smart GPs actually welcome tough LPAC oversight—it forces better decision-making and provides cover when rejecting borderline opportunities.
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Further Reading
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Frequently Asked Questions
What is LP Advisory Committee (LPAC) in venture capital?
An LP Advisory Committee (LPAC) is a subset of a fund's limited partners who serve in an oversight capacity, reviewing situations where the GP may have conflicts of interest.
Why is LP Advisory Committee (LPAC) important for startups?
Understanding LP Advisory Committee (LPAC) is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does LP Advisory Committee (LPAC) fall under in VC?
LP Advisory Committee (LPAC) falls under the fund-structure category in venture capital. This area covers concepts related to how venture capital funds are organized, managed, and governed.
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