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English: Capital Commitment
Definition: in fund raising (or the first round of recruitment) in the final stage, the fund investors simply promise a certain percentage of the total investment funding arrangements in place, the fund can be established. The remaining part in the subsequent operation of the Fund were paid in another project schedule as needed.
Interpretation: commitment of funds is one of the characteristics of the Fund in the form of limited partnership, the capital gradually put in place a paid subscription system has become the industry standard. Operation, the first round to raise funds generally invest in the rapidly ready investment projects. Looking fund subsequent screening and investment projects, the management company will issue a payment notice (Capital Call) to fund investors in accordance with the actual situation. After the commitment of funds, fund investors will invest in the fund during the period, according to the notice of the management company invested capital in batches to pay, directly caused by accumulated actual investment commitments amounting to total investment.
Compared with all manner of funds invested once in place, the commitment of funds to make much more efficient use of funds. Will produce idle time costs money, too much idle capital funds will reduce the fund's internal rate of return (IRR), a negative impact on overall fund performance. Therefore, under normal circumstances the management company does not require the investor to pay all at once invested, the fund unless the fund is based on a single project, or other special circumstances. At the same time, fund managers need to consider the case of delayed payment of the investor contribution, to avoid losing because of insufficient funding and investment opportunities.
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