A capital call is a notice a venture capital fund sends to its investors that they must now contribute a portion of their capital commitment to the fund.
When a venture capital firm raises a fund, it gets its investors to commit to a certain capital amount known as a “capital commitment” in exchange for an equity interest in the fund. Thus, the investor does not fully-fund the venture fund with their capital commitment when they sign the fund’s documents. Rather, the venture capital fund’s investment agreement will spell out the procedure how the fund will make capital calls, including notice provisions, minimum amounts, and penalties for late payments.
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