Alto
Glossary

What is a capital call?

A capital call (also known as a drawdown) refers to a request made by an investment fund, such as a private equity fund or venture capital fund, to limited partners (investors). The request calls for a portion of the committed capital that they’ve agreed to invest. 

When investors commit to a fund, they don’t typically provide the full amount of their commitment upfront. Instead, the fund makes capital calls every now and then to make investments or cover expenses as needed. This ensures that the fund has the necessary capital to make investments—without holding excessive cash up front. 

Capital calls occur periodically, based on the fund’s investment pace and needs. When an investment fund makes a capital call, investors are obliged to fulfill it as per their commitment agreements.

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