Capital call

Capital call

Capital Call (also known as a draw down) is the legal right of an investment firm or an insurance firm to demand a portion of the money promised to it by an investor [ [http://vcexperts.com/vce/library/encyclopedia/glossary_view.asp?glossary_id=225 Capital Call - Glossary - Encyclopedia - Library - VC Experts ] ] [ [http://companycrafters.onlinetech.net/Entry.aspx?Id=1292 capital call - Entrepreneurs Online Dictionary ] ]

For example, when an investor buys into a real-estate fund, that fund's managers may wait some time before using the investor's money to buy real estate, either because they are waiting for real estate prices to be favorable, or because they are researching new deals. When they are ready to actually buy real estate, the fund managers may issue a capital call, requiring investors who have committed money to the fund to actually transfer that money over.

References


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