Launch an institutional-grade VC fund in a day with no up front costs. 
Meet Start Fund
Previous Post
Next Post
1

Asked by

Community Member

on

in

Fundraising

What assurance does an LP have that the GP will not call capital faster than over the promised investment period of 3-4 years?

An propective LP wants some assurance that their commitment will not be called substantially faster than the proposed 3-4 year investment period. What's the best way to address this contractually in the LPA, and in practice?
1 See in Base
0

Answered by

Community Member

on

There is nothing contractually in the LPA that prohibits a GP to call capital as needed and a GP shouldn't make promises or capital call schedules since they have no definite way of knowing how their deal flow and investment needs will be over the entire investment period. Furthermore, a GP shouldn't call all of the capital over the investment period as money will be needed after the investment period for on going management fees and fund expenses. In summary, an LP needs to have trust in the GP as a steward of their money and that they have the best interests of the fund.

Join VC Lab

VC Lab, the leading venture capital accelerator, empowers new and emerging managers worldwide to close ethical, high-performing funds in under six months. The program provides cutting-edge tools, expert mentorship, and a global network to raise more money in less time. Apply if you want to build a meaningful venture capital firm.

Apply Now
How do I start raising my first venture fund? What are the key considerations for becoming a Limited Partner?
How can I improve my emerging manager firm's deal flow? What strategies help attract institutional LPs?
How do I build a compelling investment thesis? What are best practices for portfolio management?
How can I differentiate my VC firm in a crowded market? What are the typical fund terms for emerging managers?