Fundraising
What is Capital Call?
A capital call (or drawdown) is a request from the fund’s general partner asking limited partners to transfer a portion of their committed capital, usually to fund a new investment or pay fund expenses.
A capital call is the mechanism by which a GP draws down committed capital from LPs. Rather than holding all investor money from day one, the fund issues calls — typically with a short notice period — as it deploys into deals or needs to cover fees and expenses.
Failure to meet a capital call can carry severe penalties under the LPA, including forfeiture of a portion of the LP’s interest. The pattern of calls early and distributions later is what produces the "J-curve" of fund returns.
Also known as: drawdown, capital calls