Capital Call
When a GP requests LPs to send a portion of their committed capital to fund investments.
Definition
A capital call is a notice from the GP to LPs requesting that they transfer a portion of their committed capital to the fund. LPs do not send all their money at once; instead, the GP calls capital over 3-5 years as investments are made. Capital calls typically give LPs 10-14 days to wire funds. Failure to meet a capital call can result in severe penalties, including forfeiture of the LP's fund interest.
Why it matters
Capital calls do not directly affect employees, but they are the mechanism by which your company's investment round gets funded. If an LP defaults on a capital call, the GP may have less money to invest, potentially affecting your company's funding.
Example
A GP raises a $500M fund. In Year 1, they find 5 deals to invest in and issue a capital call for $75M (15% of commitments). An LP that committed $50M must send $7.5M within 10 business days.