Fund Structure
Capital Call
A request from a VC fund’s general partner to limited partners to transfer a portion of their committed capital — triggered when the fund is ready to make investments.
A capital call (also called a drawdown) is the mechanism by which a venture fund actually collects the money its LPs have committed. When LPs invest in a fund, they sign a legal commitment to contribute a certain amount over time, but they don't wire all the money upfront. Instead, the GP issues capital calls as the fund finds investment opportunities.
LPs typically have 10–15 business days to respond to a capital call by wiring the requested amount. Failure to fund a capital call is a serious breach of the partnership agreement and can result in penalties including forfeiture of the LP's interest in the fund.
Capital calls happen throughout the investment period (usually the first 3–5 years of a fund's 10-year life). The timing and pace of calls depends on deal flow — a hot market might lead to faster deployment; a slow market means calls are spaced out more.
In Practice
An LP committed $5M to a fund. After 6 months, the GP issues a capital call for 20% of commitments ($1M from this LP) to fund three new investments. The LP wires $1M within the required window. Over the next 4 years, the remaining $4M is called in similar increments.
Why It Matters
Capital calls are a key part of LP portfolio management — LPs must maintain liquidity to meet calls even when market conditions are difficult. For GPs, managing the timing of calls relative to LP liquidity needs is an important relationship management function.