Recycling overview
Recycling refers to a provision that can be added to a fund’s Limited Partnership Agreement (LPA) that allows the General Partner (GP) to reinvest principal proceeds (returned capital) back into the fund for new investments. By “recycling” this returned capital, GPs can increase the total investable capital available, potentially boosting overall returns for Limited Partners (LPs).
How it works
- Capital returns: When an investment is exited, the fund will typically return the principal to LPs.
- Reinvestment: With a recycling provision in place, some or all of that returned principal can be recycled back into the fund and redeployed into new or follow-on investments.
- Recycling limit: GPs can set a recycling percentage when establishing the fund. This percentage represents the maximum share of total commitments that can be recycled.
It is important to note that if you have further questions about how recycling works or want to set a recycling percentage for your fund, feel free to reach out to the AngelList team or refer to the detailed documentation on Recycling.