# 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)](https://fund-forecasting@carta.com/learn/private-funds/structures/general-partner/) 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](https://fund-forecasting@carta.com/learn/private-funds/venture-capital/), [private equity funds](https://fund-forecasting@carta.com/learn/private-funds/private-equity/), and real estate funds. When a private fund is raised, its investors, also known as [limited partners (LPs)](https://fund-forecasting@carta.com/learn/private-funds/structures/limited-partner/), 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.

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### 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](https://fund-forecasting@carta.com/learn/private-funds/management/fund-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](https://fund-forecasting@carta.com/learn/private-funds/management/portfolio-management/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.”

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## 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](https://fund-forecasting@carta.com/learn/private-funds/management/portfolio-management/portfolio-construction/).

**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](https://fund-forecasting@carta.com/learn/startups/exit-strategies/mergers-acquisitions/) and are typically larger and less frequent.

**Venture capital funds** typically invest in [startups](https://fund-forecasting@carta.com/learn/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](https://fund-forecasting@carta.com/learn/startups/fundraising/).

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## 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.

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## How Carta can help

Carta’s [capital calls request tool](https://releasenotes.carta.com/redesigned-capital-call-request-tool-b5soU) is designed to make capital calls fast and easy.