What is a capital call?

A capital call is a request for investors to contribute additional capital to a partnership or investment fund, typically made by the fund manager. This request is made when the fund requires more money to cover existing investments, take advantage of new investment opportunities, or meet other financial needs.

Investors are typically required to fulfill capital calls within a specified time frame, often within 15 to 30 days of receiving the notice. Failure to meet a capital call may result in penalties or consequences, such as a reduction in ownership stake or loss of voting rights.

Capital calls are a common feature of private equity, venture capital, real estate, and other alternative investment funds where investors commit capital over a period of time rather than all at once. The ability to issue capital calls allows fund managers to deploy capital efficiently and effectively manage the fund's investment strategy.