Capital Commitment

Capital commitment is the total amount of capital that investors pledge to contribute to a fund over a specified time period. This commitment is drawn down by the fund as needed for investments. It is a common practice in private equity and venture capital, where capital is deployed gradually. Understanding the terms of capital commitments is critical for fund managers in managing liquidity and meeting portfolio needs.

• Pledged capital investors agree to contribute to a fund.
• Drawn down gradually over time as needed.
• Important in private equity and venture capital structures.
• Crucial for managing liquidity and investments.