Fund Structure
Dry Powder
Cash reserves that a VC fund has committed but not yet deployed — available for new investments or follow-on rounds.
Dry powder refers to the committed but uninvested capital sitting in a VC fund, available to be deployed into new investments or follow-on rounds in existing portfolio companies. When LPs commit capital to a VC fund, the money isn't transferred immediately — instead, the GP issues capital calls as investments are made. The uninvested portion is the fund's dry powder. Having dry powder matters enormously: funds that run out too early can't support their portfolio companies in subsequent rounds, leading to dilution and loss of ownership. Industry-wide, dry powder levels are tracked as a macro indicator of VC market activity.