Committed Capital

These three terms are related but distinct. Committed capital is the full pledge — what LPs promise. Called (or contributed/paid-in) capital is the portion actually wired in via capital calls so far. Invested capital is the portion of called capital that's gone into actual deals (excluding fees and expenses). At any moment: committed ≥ called ≥ invested. The gap between committed and called is the fund's dry powder — money available but not yet drawn. Interviewers love testing whether you can keep these straight, because plugging the wrong one into a fee or return calculation gives the wrong answer.

When you read "Firm X closed a $5bn fund," that $5bn is committed capital — total pledges at final close, not cash on hand. It's the cleanest measure of fund scale and the basis for the management fee during the investment period (e.g., 2% of $5bn committed). It also determines the firm's investment firepower and influences deal sizes the fund can pursue. After the investment period, the fee basis typically shifts off committed capital toward invested capital, which is why distinguishing the two matters for modeling fund economics.

Committed capital anchors the standard PE performance ratios. DPI (distributions to paid-in) and RVPI (residual value to paid-in) use paid-in (called) capital, not committed. But the paid-in/committed ratio tells you how far along deployment is. A fund that has called 70% of committed capital is well into its investment period; one at 20% is early (and likely still in its J-curve). LPs track their unfunded commitment (committed minus called) for liquidity planning, since they must keep cash ready to meet future capital calls.

A subtle point: a fund can sometimes deploy more than 100% of committed capital through recycling. If a fund exits an investment early, the LPA may let the GP recall and reinvest those proceeds (within limits and a time window) rather than distribute them — so the cumulative amount invested can exceed total commitments. This is why "the fund is fully deployed" doesn't always mean every commitment dollar is locked once; recallable capital adds flexibility. It's an advanced nuance but a real one in fund modeling.