What is a Capital Call? How Drawdowns Work in PE & VC Funds

Q: What is the difference between a capital call and a drawdown?

Nothing material: they are two names for the same request. "Drawdown notice" is the document; "capital call" is the event.

Q: How much notice must LPs be given?

It is set in the limited partnership agreement. 10 business days is a common market term, but individual funds differ.

Q: What is unfunded commitment?

Unfunded commitment is the part of an LP's commitment not yet called: total commitment minus capital contributed to date.

Q: What happens if an LP does not fund a capital call?

The LPA's default provisions apply. These commonly include penalty interest, loss of voting rights, forced sale of the interest, or forfeiture of part of the existing contribution.

By aama.io Fund Operations Team · Last reviewed 2 October 2026

A capital call, also called a drawdown, is a formal request from a fund manager for limited partners to pay in part of the capital they committed. Funds call capital as needed for investments, fees and expenses, rather than collecting the full commitment upfront, and each LP pays pro rata to its commitment.

Sourced information — it can change

This page is compiled from public sources (listed at the bottom) and last reviewed on 2 October 2026. Regulations, thresholds, fees and market practice change, so it may not reflect the latest position. Check with your fund documents (LPA) and legal counsel before acting.

Key facts

Also called	Drawdown, capital drawdown, contribution request
Triggered by	New investments, management fees, fund expenses
Allocation	Pro rata to each LP's commitment (unless the LPA says otherwise)
Notice period	Set in the LPA; 10 business days is common
Documented in	A drawdown (capital call) notice to each LP
If an LP defaults	LPA default remedies apply, such as penalty interest or forfeiture

How it works

The GP identifies a funding need. An investment closing, a management fee due or fund expenses create a cash requirement that cash held by the fund does not cover.
The amount is allocated pro rata. The call is split across LPs in proportion to their commitments. Each LP's share is the call amount multiplied by its commitment divided by total commitments.
A drawdown notice is issued. Each LP receives a notice stating the amount, the purpose, the due date and wire instructions, within the notice period set in the LPA.
LPs fund by the due date. LPs wire their share. The administrator reconciles receipts against notices and chases any shortfall.
Records are updated. Each LP's contributed and unfunded commitment is updated. Unfunded commitment is commitment minus all capital contributed to date.

Worked example: $50M fund calling 20%

A fund has $50M of total commitments. The GP calls 20% to fund an $8M investment and $2M of management fees. One LP has committed $5M.

Total call (20% × $50M)	$10M
Of which: investment	$8M
Of which: management fees	$2M
LP's share of commitments ($5M ÷ $50M)	10%
LP pays (10% × $10M)	$1M
LP unfunded commitment ($5M − $1M)	$4M
Fund unfunded commitment ($50M − $10M)	$40M

Because each LP pays pro rata, every LP's called percentage is the same (20%). Reconciling each LP's receipt against its pro rata amount is the core administrative task.

Common mistakes

Allocating on contributed capital instead of commitments. Calls are pro rata to commitments unless the LPA says otherwise.
Missing the LPA notice period, which can invalidate the call or delay funding.
Not netting recallable distributions or LP excuse rights from the amount.
Tracking commitments, calls and unfunded balances in spreadsheets that drift out of step with the notices actually sent.

The Singapore and APAC angle

In Singapore and wider APAC, LPs are often multi-currency and include family offices and corporates with their own internal approval cycles, so wire cut-offs and FX conversion need to be built into the notice timeline. For a VCC, calls are made at the sub-fund level, so each notice and the unfunded commitment ledger must track the right sub-fund.

Frequently asked questions

What is the difference between a capital call and a drawdown?

How much notice must LPs be given?

What is unfunded commitment?

What happens if an LP does not fund a capital call?

Free tools

Capital Call Schedule Builder (Drawdown Pacing)Drawdown Notice Generator (Capital Call Notice)

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VC / PE Firms

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Related terms

Distribution Waterfall

A distribution waterfall is the order of priority in which a fund's proceeds are paid out. Typically LPs first receive their invested capital back, then a preferred return, then the GP receives a catch-up, and finally profits are split between LPs and the GP, usually 80/20, as carried interest.

Fund Administrator

A fund administrator is the firm, or in-house team, that runs a fund's back office: calculating NAV, keeping the books, processing capital calls and distributions, maintaining investor records and producing reports. It is distinct from the fund manager, which makes the investment decisions.

Variable Capital Company (VCC)

A Variable Capital Company (VCC) is a Singapore corporate fund structure, available since January 2020, that can hold a single fund or an umbrella of ring-fenced sub-funds. It issues and redeems shares at net asset value without a capital-reduction process, and must be managed by an MAS-regulated fund manager.

Sources

ILPA Capital Call and Distribution Notice Template

General information, not tax, legal, accounting or investment advice. This content is sourced from the references above and from public regulatory material, and it can become outdated. Always confirm the current position with your fund documents (LPA) and legal counsel, and take professional advice for your specific situation, before relying on it.