In practice
A commitment is made in the subscription agreement and governed by the LPA, usually at the investor’s admission to the fund. It is often confused with paid-in capital, which is only the part already called. Unfunded commitments can be called during the investment period, and some can be called later for fees, expenses or follow-on investments. Defaulting investors typically face penalties.
An example
Round numbers, not a real fundSay an investor commits $50 million. The manager calls $10 million in the first year, so $40 million is still to come.
Why it matters
It is the figure that sets an investor’s share of everything in the fund, and it is a promise, not cash in the bank.
In the news
Recent stories that use the term- MainePERS approves 2 private equity commitments for up to $100 million
- M&G launches £74m private credit LTAF for DC savers
- Nicola Forrest anchors Antler’s $70 million 3rd fund in $30m push for women founders
- Maine PERS brings 2026 infrastructure commitments to $580m
- TPG lights a $10bn beacon in a murky market
- Coöperatie VGZ commits €25m to Kempen SDG Farmland Fund
A definition, not advice; where usage varies the entry says so. Something wrong? Tell the desk.