GP Guarantee
A GP guarantee is a commitment by the general partner or its principals to cover fund shortfalls, complete unfinished projects, or backstop specific obligations.
| Guarantee Type | Scope |
| Completion guarantee | Ensure development projects finish |
| Fund expense guarantee | Cover operating costs if fund cash insufficient |
| Clawback guarantee | Personal liability to return excess carry |
| Key person guarantee | Continue operations if key personnel depart |
| Minimum return guarantee | Rare, ensure minimum LP return |
| Construction loan guarantee | Personal guarantee for development financing |
| Guarantee Limitations | Reality |
| Capped amount | Limited to GP commitment or specific threshold |
| Recourse to GP | Personal assets may be at risk |
| Insurance backstop | Some guarantees insured |
| Investor protection | Aligns GP interest with LP success |
| Rare in established funds | Primarily for first-time or high-risk funds |
| Due diligence priority | Assess GP financial capacity to honor |
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