A capital call is the mechanism by which a venture fund draws committed capital from its Limited Partners as needed for investments or expenses. Also called a "drawdown," it applies across PE funds, real estate funds, and other private investment vehicles, typically over the first 4-5 years of fund life, with strict legal obligations on LPs to fund each call within the defined window (typically 10-30 days) and serious consequences for failure to fund. It is the operational mechanic that connects LP capital commitments to actual deployed capital, and one of the most important fund-administration concepts to understand.
The mechanic: LPs commit capital at fund formation but don't fund the commitment immediately. Instead, the GP i...