Reference

Capital Raising Glossary

Plain-English definitions of the terms that matter in fundraising, LP outreach, and fund formation.

A

Accredited Investor An individual or entity that meets specific SEC-defined income, net worth, or professional criteria, qualifying them to invest in private fund offerings. Anchor Investor The first institutional or significant LP to commit capital to a fund, whose participation serves as a credibility signal that accelerates the rest of the fundraise.

C

Capital Call A formal notice from the GP to LPs requesting that they transfer a portion of their committed capital to the fund for investments or expenses. Carried Interest The GP's share of fund profits, typically 20%, earned after returning LP capital and meeting a preferred return hurdle.

D

Due Diligence Questionnaire A standardized document, often 100+ questions, that LPs send to fund managers to evaluate the fund's strategy, operations, team, and risk profile before committing capital.

F

Final Close The last date on which a fund can accept new LP commitments, after which the fund's total capital base is fixed. First Close The initial closing of a fund where enough capital has been committed for the GP to begin calling capital and making investments. Form D An SEC filing that fund managers must submit after their first sale of securities, serving as the formal notice that the fund is relying on a Regulation D exemption. Fund Administration The outsourced operational and accounting services that manage a fund's financial reporting, investor communications, capital calls, and regulatory compliance. Fund of Funds An investment fund that allocates capital across multiple underlying private equity, venture capital, or hedge funds rather than investing directly into companies.

G

General Partner The entity or individual responsible for managing a fund's investments, operations, and LP relationships, bearing unlimited liability for fund obligations. GP Commitment The amount of capital the general partner invests into their own fund, demonstrating alignment of interest with LPs.

L

Limited Partner An investor who commits capital to a fund but has no role in managing it, with liability capped at the amount they invested.

M

Management Fee An annual fee, typically 1.5-2% of committed capital, paid by LPs to the GP to cover the fund's operating costs.

P

Placement Agent A third-party intermediary hired by fund managers to help raise capital from institutional and high-net-worth investors, typically compensated as a percentage of capital raised. Private Placement Memorandum The primary legal disclosure document for a private fund offering, describing the strategy, terms, risks, and team to prospective investors.

R

Regulation D A set of SEC rules that allows private funds to raise capital without registering the offering, provided they meet specific exemption requirements.