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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?
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Answered by

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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.

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