What is Capital Call?
Capital Call
A Capital Call (or drawdown) is the process by which a venture capital firm requests its Limited Partners to transfer a portion of their committed capital to fund an investment or cover fees.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Capital Call helps founders model equity distributions when structuring rounds for vc fund operations and capitalization.
Detailed Deep Dive
A Capital Call (or drawdown) is the process by which a venture capital firm requests its Limited Partners to transfer a portion of their committed capital to fund an investment or cover fees.
Frequently Asked Questions
Q:How much notice is given for a capital call?
Typically GPs give LPs 10 business days to transfer the requested cash.
Q:What happens if an LP defaults on a capital call?
They face severe penalties, including loss of their existing fund ownership and potential legal actions.
Quick Facts
- CategoryFunding
- Key ApplicationVC fund operations and capitalization
Coverage Trend12 Weeks
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