Resources / Glossary / Committed capital

Committed capital.

Aka. Commitments · total commitments · fund size
All terms

What is committed capital?

Committed capital is the sum of all the binding pledges investors make to a fund at closing. When an LP signs a subscription agreement, it commits a fixed amount — say $50 million — that the GP can draw against over the fund's investment period. The aggregate of every LP's commitment, plus the GP's own, is the fund's committed capital, and it is what people mean by "fund size."

Crucially, a commitment is a promise, not a payment. The money is not transferred at closing; it is contributed in pieces as the GP issues capital calls to fund investments and expenses. An LP's commitment therefore splits at any moment into the portion already drawn (contributed capital) and the portion still owed (uncalled commitment, or dry powder).

This distinction is the foundation of the entire private-fund model. It lets a GP secure a large pool of capital it can deploy opportunistically, while letting LPs keep their money productive until it is genuinely needed.

Why committed capital is the master number

Committed capital anchors most of a fund's mechanics, which is why it appears everywhere in fund documents.

  1. Fee base. Management fees are conventionally charged as a percentage of committed capital during the investment period — so an LP pays fees on its full commitment even before all of it is drawn.
  2. Pro-rata allocation. Each LP's share of every capital call, distribution, and gain is set by its commitment relative to total commitments.
  3. Investment capacity. The size of deals a fund can pursue and the diversification it can achieve are bounded by total commitments.
  4. Performance framing. Metrics like the ratio of called-to-committed capital signal how far along a fund is in deploying its pool.

Because fees often run on committed rather than invested capital, an LP effectively pays for capital it has not yet put to work. This is one reason the fee base eventually steps down — typically shifting to invested capital — once a fund exits its investment period.

Committed vs. called vs. invested capital

These three terms are easy to confuse but describe different things. Committed capital is what an LP has promised. Called (or contributed) capital is what the GP has actually drawn down so far. Invested capital is the portion of called capital that has gone into actual portfolio investments, as opposed to fees and expenses.

The gaps between them matter. Committed minus called is the fund's dry powder. Called minus invested reflects the drag of fees and costs. Tracking all three over time is how an LP understands not just how big its commitment is, but how much of it is at work, how much is still owed, and how efficiently the fund is converting promises into investments.

Frequently asked.

5 questions
01 Is committed capital the same as fund size?

Effectively, yes. When a fund announces it has "raised" or "closed" a certain amount, that figure is its total committed capital — the sum of all investor pledges plus the GP's own commitment. It is the headline measure of a fund's scale.

What it is not is cash in the bank. The committed amount is drawn down gradually through capital calls as the GP finds investments to make.

02 Do LPs pay fees on committed capital they haven't funded yet?

Typically yes, during the investment period. Management fees are conventionally charged on total committed capital, meaning an LP pays the fee on its full pledge even while large portions remain uncalled. This is a long-accepted feature of the model and a frequent point of negotiation.

After the investment period ends, the fee base usually steps down — often to invested capital — so that LPs stop paying fees on commitments the fund will never call.

03 What is uncalled commitment?

Uncalled commitment is the portion of an LP's pledge that the GP has not yet drawn down — the difference between total commitment and capital called to date. Across all LPs, the fund's aggregate uncalled commitment is its dry powder: capital available to deploy but not yet at work.

An LP must keep this amount available, because the GP can call it on short notice. Failing to fund a call when the commitment is drawn triggers default remedies under the LPA.

04 Can an LP's commitment change after the fund closes?

The committed amount is fixed by the subscription agreement and generally does not change. What changes is its composition over time — the split between called and uncalled capital — as the GP draws it down.

An LP can effectively exit its commitment by selling the interest in the secondary market, where the buyer assumes both the existing value and the obligation to fund the remaining uncalled commitment. But the underlying commitment to the fund itself stays constant.

05 How do funds keep commitment accounting accurate over a decade?

Each LP's commitment drives its share of every call, distribution, fee, and gain for the life of the fund — a chain of calculations stretching over ten years or more. A single misallocation early can compound into reporting errors and disputes much later.

When every commitment and every subsequent cash flow is held in one queryable record tied back to the subscription terms, the called, uncalled, and invested splits stay reconcilable at any point — rather than being rebuilt from scattered notices each reporting period.

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