Definition
A fund agreement clause that allows GPs to reinvest early returns back into new deals rather than distributing them to LPs, extending the fund's effective deployment capacity. A controversial provision that LPs love to scrutinize because it delays their returns.
Example Usage
Thanks to our recycle provision, we reinvested the $8M from that early exit into two new Series A deals instead of distributing it.
Origin
Venture capital fund management terminology emerging in the 1990s-2000s
Fun Fact
Recycle provisions typically cap the amount that can be recycled at 10-20% of fund size and often expire after the commitment period ends.
Source: Venture capital fund partnership agreements
Related Terms
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See “recycle provision” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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