A capital call is the GP’s request that limited partners fund part of their remaining commitment to the fund.

How it works

After LPs sign commitments, capital sits uncalled until needed. The GP issues a capital call notice specifying amount per LP (usually pro rata to commitment), purpose (specific investment, fees, expenses), and wire deadline — often 10–15 business days.

Funded amounts become called capital. Many funds use subscription lines (credit facilities) to close deals quickly, then call LPs afterward to repay the line.

LP agreements define default remedies if an LP fails to pay: penalties, forced sale of interest, or forfeiture of future economics in extreme cases.

Defaulting LPs create reputational damage across a GP’s platform — treasury teams treat call notices as binding obligations with the same rigor as public bond payments, not informal fundraising reminders.

Some institutional LPs batch wires across multiple fund calls on the same day — late notice delivery can miss internal cutoff times and delay portfolio company funding.

Why it matters

• LPs: Treasury teams forecast calls from fund pacing reports. Unexpected lump calls strain co-investment plans across a portfolio.
• GPs: Smooth, transparent pacing protects fundraising reputation for the next vintage. Over-calling relative to deployment triggers LP questions on fees and reserves.

Common mistake

LPs treating commitments as optional liquidity. Calls are legal obligations — budget for the full commitment over the fund life, not just the first few years of deployment activity.

Related ideas

See also called capital, capital call notice, commitment, subscription line, and dry powder.