What is a first close?

The LPA usually sets a window, often 12 to 18 months, for further closes after the first. Investors admitted later typically pay their share of fees and costs back to the first-close date, plus interest, which is the job of equalization. Early investors sometimes get fee discounts. First close is often confused with the fund’s formation date.

Say a fund targets $2 billion. It holds a first close at $800 million, starts investing, and keeps raising from new investors for months.

It is the first sign a fund will exist, and it sets the date from which later investors are usually measured.

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