Short answer: Committed capital is the total amount an investor is contractually obligated to provide to a fund. Paid-in capital is the portion the general partner has drawn to date. The difference between them is the unfunded commitment, which remains callable at the general partner's discretion. Every standard fund performance multiple divides by paid-in capital, not by commitment.

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Key takeaways

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• Committed capital is a contractual obligation recorded in the subscription documents, not a payment.
• Paid-in capital, also referred to as capital called, called capital, or contributed capital, is the amount actually transferred to the fund.
• Unfunded commitment is the difference. It is a liability, not an asset, and it does not appear in net worth.
• DPI, RVPI, and TVPI all use paid-in capital as the denominator, per ILPA reporting convention.
• Capital calls are issued at the general partner's discretion within the notice period set in the limited partnership agreement.
• Across multiple commitments, calls cluster rather than distribute evenly, which is the principal source of pacing risk.

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Committed, paid-in, and unfunded capital

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Three figures describe a limited partner position.

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Committed capital is the amount the investor has contractually agreed to provide over the life of the fund. It is recorded in the subscription agreement and is a binding obligation.

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Paid-in capital is the cumulative amount the fund has drawn to date. The terms capital called, called capital, and contributed capital are used interchangeably for the same figure across fund reporting and portfolio systems.

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Unfunded commitment is committed capital less paid-in capital. It represents the outstanding obligation.

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For an illustrative position, Meridian Growth Fund III:

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How capital calls operate

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Private funds do not take committed capital at closing. Capital is drawn as investments are identified, which allows the fund to avoid holding uninvested cash and preserves the reported internal rate of return.

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A capital call, also referred to as a drawdown notice, is the instruction requiring the limited partner to transfer its pro rata share. It specifies the amount, the wire instructions, the intended use, and the due date. Notice periods are set in the limited partnership agreement and commonly run to ten business days, though the term varies by fund.

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Capital calls are issued at the general partner's discretion, subject to the investment period and any restrictions in the partnership agreement. The limited partner has no discretion over timing, and default remedies apply where a call is not met.

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Drawdown pace is generally front-loaded. A fund will typically call a majority of commitments within the first three to four years while the portfolio is being assembled, with subsequent calls funding follow-on investments, management fees, and expenses.

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Why paid-in capital is the denominator

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DPI, RVPI, and TVPI all divide by paid-in capital rather than by total commitment. This is the standard institutional convention, set out in the ILPA reporting standards against which most funds report, and used consistently across the ILPA Performance Template.

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The distinction is material. A fund reporting 1.9x TVPI on $7.0M of paid-in capital has generated $13.3M of total value. The same multiple applied to a $10.0M commitment would imply $19.0M. A fund early in its investment period will therefore present differently on a paid-in basis than on a commitment basis, and the two are not interchangeable when comparing across vintages.

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Why unfunded commitment is tracked separately

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Unfunded commitment is an off-balance-sheet obligation. It carries no value, generates no return, and does not appear in a net worth figure, but it establishes a claim on future liquidity at a date the investor does not control.

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Two characteristics make it consequential for pacing.

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Calls correlate across funds. Commitments made across several funds in adjacent vintages tend to draw over overlapping periods, since drawdown pace is driven by similar market conditions. The result is concentration rather than smoothing, and it is not visible from any individual fund's reporting.

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Calls compete with other obligations. The liquidity that satisfies a capital call is the same liquidity available for tax payments, property transactions, and distributions to family members. A pacing model that tracks investment obligations in isolation from other commitments will produce an incomplete view.

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The standard treatment is to aggregate total unfunded commitment across all positions in a single currency, project the expected drawdown pace, and assess it against all other anticipated outflows on a common timeline. The Takahashi-Alexander model is the framework most institutional investors use for that projection.

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How MyFO handles this

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Transaction and investment data is tracked in MyFO, and the MyFO performance engine calculates and maintains committed capital, capital called, and unfunded commitment across every fund position and entity. That data then feeds forward: unfunded commitment becomes the basis for projecting future capital calls and distributions across the portfolio.

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To see this across an existing portfolio, book a call.

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FAQ

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What are the consequences of failing to meet a capital call?

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Remedies are set in the limited partnership agreement and are generally significant. Common provisions include forfeiture of some or all of the partnership interest, forced sale of the position, interest charges on the outstanding amount, and loss of the right to participate in future investments. Terms vary by fund and should be reviewed before commitment.

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Does unfunded commitment expire at the end of the investment period?

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Partially. Most funds define an investment period, commonly five to six years, after which uncalled capital may generally only be drawn for follow-on investments in existing portfolio companies, management fees, and fund expenses rather than new investments. A portion of commitment is frequently released at that point. The specific provisions differ by fund.

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How does recallable capital affect paid-in capital?

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Some distributions are recallable, meaning the fund may distribute proceeds and subsequently draw the same capital again. Depending on the fund's convention, a recallable distribution returned to the fund may reduce cumulative distributions, reduce paid-in capital, or both, which changes the denominator of every reported multiple. Where multiples move without a corresponding investment event, recallable capital treatment is a common explanation.

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Do subscription credit facilities change the drawdown profile?

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Yes. Where a fund uses a credit facility to fund investments and calls capital later to repay it, observed call timing reflects the facility rather than the underlying investment pace. Funds reporting under the ILPA Performance Template disclose performance both with and without the effect of subscription lines.

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Educational content, not investment, tax, or legal advice. Partnership terms including default remedies, investment period provisions, and recallable capital treatment vary by fund and are governed by the applicable limited partnership agreement.

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