What is the investment period of a VC fund?

The investment period defines when a VC fund is "open for business" in terms of making new portfolio investments. Most VC fund agreements specify an investment period of three to five years starting from the fund's initial close. During this window, the GP can deploy capital into new companies. After the investment period ends, the fund generally cannot make new investments — it can only make follow-on investments in existing portfolio companies.

This time-boxing serves an important purpose: it focuses the GP's attention. VCs are supposed to find the best opportunities within a defined market window, not hold capital indefinitely waiting for a perfect moment. The investment period creates discipline around pace and commitment.

The end of the investment period also marks a transition in fund management. During the active investment phase, GPs are sourcing deals, running due diligence, and negotiating term sheets. After it ends, the energy shifts toward helping portfolio companies grow, recruiting executives, facilitating partnerships, and preparing for exits.

Management fees sometimes step down when the investment period ends, reflecting the reduced workload. A fund that charges 2% during the active investment phase may drop to 1.5% or 1% afterward — or shift the fee calculation from committed capital to invested capital.

Founders should understand this dynamic because it affects what kind of support they can expect from their investors. A VC whose fund is in year seven of a ten-year life, past the investment period, may be operationally focused on exits rather than aggressive growth. Their portfolio company may need a new lead investor for its next round since the existing fund can't make a large new commitment.