Fund Structure
Capital Call
A request from a VC fund GP to LPs to transfer a portion of their committed capital for deployment into investments.
A capital call (or 'drawdown') is when a VC fund's GP requests LPs to wire their committed capital into the fund for deployment. LPs don't transfer all committed capital upfront — instead, capital is called as the GP identifies and closes investments. Capital calls come with advance notice (typically 10-14 days) and specify the amount and purpose. LPs who fail to meet capital calls (defaulting LPs) face severe penalties: forfeiture of existing distributions, forced sale of their LP interest at a significant discount, and potential legal action. Capital call lines of credit (subscription lines) allow GPs to borrow short-term against LP commitments to close deals faster, repaying when capital calls are made.