Skin in the game is a phrase popularized by legendary investor Warren Buffett, used to describe a situation where decision-makers have a personal financial stake in the outcome of their actions.

In the context of asset management—particularly in private equity and venture capital—the term refers to the capital commitment that the General Partner (GP) contributes to the fund they manage. While the majority of the capital typically comes from Limited Partners (LPs), the GP invests alongside them to ensure incentive alignment.

By having their own money at risk, GPs demonstrate confidence in the fund’s strategy and share both the potential upside and downside. This personal financial exposure is what constitutes having “skin in the game.”