Capital Call
A formal request from a fund's GP for LPs to wire a portion of their previously committed capital.
A capital call is how a venture fund actually collects money: rather than LPs wiring their full commitment upfront, the GP calls capital in tranches as needed to fund new investments, follow-on rounds, management fees, and fund expenses. LPs are contractually obligated to fund capital calls within a specified window (commonly 10 business days) or face penalties, including potential forfeiture of their interest in the fund.
This structure improves capital efficiency for LPs, who can keep uncommitted funds invested elsewhere (public markets, other funds) until actually needed, rather than sitting in cash for years waiting to be deployed by the GP.
LPs should maintain a capital-call reserve or liquid credit facility for their full outstanding commitment across all funds — missing a capital call deadline can trigger real financial and reputational consequences with a GP.
What happens if an LP misses a capital call?
Consequences vary by fund agreement but can include interest penalties, forced sale of the LP's interest at a discount, or in severe cases forfeiture of prior contributions and remaining fund interest.
Related terms
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