Capital calls

Author: The Carta Team
Read time: 8 minutes
Published date: July 11, 2025

When fund managers are ready to invest in a private company, they usually have to make a capital call first. Learn more about capital calls in private equity and venture capital.

What is a capital call?

A capital call is a formal request by an investment fund to its investors to contribute a portion of the capital they have previously agreed to commit, typically for new investment opportunities or operational expenses. Capital calls allow general partners (GPs) to draw down capital from investors as it’s needed, rather than all at once. This process improves a fund’s cash flow efficiency by aligning capital deployment with investment opportunities and minimizing idle cash.

Capital calls are a key feature of closed-end investment funds like venture capital funds, private equity funds, and real estate funds. When a private fund is raised, its investors, also known as limited partners (LPs), commit capital to the fund, but do not immediately transfer the money they commit. Their capital commitment—also called a “subscription”—is a legally binding promise that they’ll send the money they pledged when the fund manager requests it.

[...]

The capital call process

The specifics of a capital call can vary depending on the type of fund, but the general process is similar across private equity, venture capital, and other closed-end funds.

1. Commitment phase: At the beginning of the fund, investors agree to commit a certain amount of money to the fund over its lifecycle.
2. Issuing a capital call notice: The GP of the fund issues a capital call in order to fund a new investment opportunity, cover fund expenses, fund a follow-on investment, or meet other liquidity needs.
3. Funding and deployment: Investors transfer the requested funds, typically within 10 to 14 days. Once received, the GP deploys the capital.
4. Tracking capital contributions: The fund tracks the total paid-in capital of each investor so each investor meets their total capital commitment over time. The difference between an investor's committed capital and paid-in capital is known as “uncalled capital.”

[...]

Capital calls in private equity and venture capital

The amount of capital, timing, and frequency of capital calls will depend on the fund’s investment strategy.

Private equity funds often invest in growth-stage companies, public companies, and other mature businesses, aiming to improve operations and increase profitability before selling at a higher valuation. Capital calls in private equity are usually tied to investment opportunities or acquisitions and are typically larger and less frequent.

Venture capital funds typically invest in startups, early-stage companies, and high-growth companies. Capital calls in venture capital may be more frequent but smaller in size to support multiple fundraising rounds.

[...]

Example of a capital call

Imagine you’re the GP of Krakatoa Ventures Fund II, a $100 million fund specializing in early- to mid-stage biotech companies. You’ve just reached a deal to make a $5 million Series B investment in a startup called Genealogy Life Sciences, but you only have about $1 million on your balance sheet. To complete the deal, you’ll need to call capital from your investors.

[...]

How Carta can help

Carta’s capital calls request tool is designed to make capital calls fast and easy.