Capital Call
Secondary & Pre-IPO Markets
Definition
A notice from a private fund or investment vehicle requiring investors to fund a portion of their committed capital. Capital calls are common in private equity, venture capital, real estate, private credit, and some feeder structures.
Why it matters
Capital calls create liquidity obligations. An investor may commit more capital than is initially funded, but must be ready to wire money when called. Missing a call can trigger default remedies, dilution, forfeiture, interest, or forced sale of the investor's interest.
Common misconceptions
- •Commitment is not the same as funded investment; unfunded commitments remain obligations.
- •Capital calls can arrive during market stress, when liquidity is most valuable.
- •Default remedies are usually harsh because one investor's failure can harm the fund.
Technical details
Notice and default
Fund documents specify notice periods, payment instructions, permissible uses, default interest, dilution, suspension of rights, forced transfer, or forfeiture remedies for missed calls.