capital call

Definition

The formal demand from a general partner to limited partners to wire their committed funds, usually with 10-30 days notice and an implied "or else" hanging in the air. It's how venture funds move committed money from promised to deployed.

Example Usage

We issued a capital call for $5M to cover three new investments and fund operations for the next quarter.

Origin

Private equity and venture capital fund management terminology formalized in the 1970s-1980s

Fun Fact

LPs who fail to meet capital calls can face penalties including dilution of their fund ownership or even being kicked out of the fund entirely.

Source: Venture capital fund operations and partnership agreements

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