Fund Structure
What is Fund Term?
The fund term is the maximum lifespan of a private fund as defined in the LPA — most commonly 10 years — after which the fund must wind down and return all capital to LPs.
A fund's term is fixed in the LPA and defines when the GP must return capital to investors. Most private equity and venture capital funds have a 10-year term with optional one-year extensions (typically two). Real assets and infrastructure funds sometimes have longer terms of 12–20 years.
Managing to fund term creates pressure on GPs to exit investments before the deadline, sometimes at sub-optimal times. Extensions require LP consent — usually a majority of the LPAC.
Related Terms