Fund Structure
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Quick Answer
The total amount LPs have legally agreed to invest in a fund — distinct from called capital (money already transferred to the fund).
Committed capital is the total amount that LPs have contractually pledged to a VC fund. It represents the fund's maximum investment capacity. Called capital (or paid-in capital) is the subset that has actually been transferred to the fund and deployed. The difference between committed and called capital is the fund's remaining dry powder — available for future investments and follow-ons. Management fees are typically calculated on committed capital (not called capital) during the investment period, which is why LPs are paying fees on capital they haven't yet transferred. Fund size is measured by committed capital. A $200M fund means LPs have committed $200M in total — though it may take 3-5 years to fully deploy.
In Practice
Andreessen Horowitz announces a new $4.5B fund with committed capital from 200+ LPs including pension funds, endowments, and sovereign wealth funds. This means LPs have signed legal commitments to provide $4.5B over the fund's life, but a16z hasn't collected this money yet. Instead, they'll issue capital calls as they make investments - perhaps calling $200M in Q1 to fund five new deals. The difference between the $4.5B committed and the amount actually called represents dry powder that a16z can deploy in future investments.
Why It Matters
Understanding committed versus called capital helps founders gauge a VC's true firepower and urgency. A fund with high committed but low called capital has significant dry powder and flexibility for follow-on investments. Conversely, a fund that's called most of its committed capital may have less ability to support portfolio companies in future rounds. This dynamic affects everything from initial check sizes to the likelihood of insider participation in later funding rounds, making it crucial intelligence for founders choosing investors.
VC Beast Take
The gap between committed and called capital has widened dramatically as fund sizes have ballooned. Many mega-funds now sit on unprecedented amounts of dry powder, creating deployment pressure that's reshaping the entire venture ecosystem. This capital overhang means VCs are often more eager to write bigger checks than founders expect, but it also means the bar for initial investments may actually be higher as GPs become more selective about where to deploy their war chests.
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Committed capital is the total amount that LPs have contractually pledged to a VC fund. It represents the fund's maximum investment capacity. Called capital (or paid-in capital) is the subset that has actually been transferred to the fund and deployed.
Understanding Committed Capital is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Committed Capital falls under the fund-structure category in venture capital. This area covers concepts related to how venture capital funds are organized, managed, and governed.
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