Fundraising
What is Hard Cap?
A hard cap is the maximum amount of capital a fund will accept from limited partners. Once the hard cap is reached, the fund is closed to additional capital regardless of demand.
The hard cap limits total fund size and is set in the LPA before fundraising begins. It protects LPs from "style drift" — if a fund grows too large, the strategy that generated historical returns may no longer be executable at scale. Hitting the hard cap early is a sign of strong LP demand.
Some funds set a "target" size (the amount they aim to raise) and a separate hard cap (the maximum they would accept). Raising between target and hard cap typically requires LPAC approval.