commitment period

Definition

The time window (usually 3-5 years) during which a venture fund actively deploys capital into new investments, after which the GP is supposed to stop writing checks and focus on managing the existing portfolio. Think of it as the VC equivalent of last call at the bar.

Example Usage

We're in year four of our commitment period, so we need to deploy the remaining $20M before we shift into portfolio management mode.

Origin

Private equity and venture capital fund structure terminology from the 1980s

Fun Fact

Some funds extend their commitment periods through amendments if they haven't fully deployed, though LPs often scrutinize this as evidence of poor fund management.

Source: Venture capital fund structure and limited partnership agreements

Related Terms

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platform value-add

Services and resources VC firms provide beyond capital, such as recruiting help, PR support, or customer introductions. Marketing speak that ranges from genuinely useful to completely fictional.

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acquihire

When a company buys a failing startup primarily for its talent, with the product being immediately shut down. A face-saving exit that's really just an expensive recruiting strategy with better PR.

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cram down

A financing round where new investors impose unfavorable terms on existing shareholders who lack the power to block it. Essentially a hostile takeover by people already inside your building.

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carried interest

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suatmm

shut up and take my money...