Private capital fundraising glossary

45 terms used across institutional fundraising — process, LP types, fund economics, performance metrics and structuring — defined for general partners and their teams.

Fundraising process

Placement agent: A regulated intermediary that introduces fund managers to limited partners, manages the fundraising process and supports diligence through to commitment. Compensation typically combines a retainer with a success fee on capital closed. Placement agent services What is a placement agent (2026 guide)
Pre-marketing: Informal testing of investor appetite for a fund strategy before the vehicle is formally launched. In the EU, pre-marketing is regulated under AIFMD II and must be notified to the relevant regulator.
First close: The point at which a fund holds its initial signing of subscription agreements and can begin investing. First close typically requires reaching a minimum viable fund size and often carries early-bird economics.
Final close: The end of the fundraising period, after which no further limited partner commitments are accepted. Most institutional funds run twelve to twenty-four months between first and final close.
Anchor investor: A large limited partner that commits early to a fund, giving credibility to later investors. Anchors often negotiate fee discounts, co-investment rights or advisory board seats in return.
Capital readiness: The state of having positioning, track record attribution, materials, data room and target list prepared to institutional standard before entering the market. Engagement models
DDQ (Due Diligence Questionnaire): A standardised questionnaire, often based on the ILPA template, through which limited partners request detailed information on a manager's team, strategy, track record, operations and compliance.
PPM (Private Placement Memorandum): The offering document that sets out a fund's strategy, terms, risk factors and manager background. It is the primary legal disclosure document given to prospective limited partners.
Data room: A controlled repository of fund documents shared with prospective investors during diligence, with permissioned access, watermarking and engagement tracking.
LP mandate matching: The process of scoring limited partners against a fund's strategy, geography, stage and ticket size to prioritise outreach on allocators whose mandate can actually accommodate the fund. LP mandate matching explained AI for fundraising

LP universe

Limited partner (LP): An investor that commits capital to a fund without participating in its management, with liability limited to the amount committed.
General partner (GP): The manager of a fund, responsible for sourcing, executing and exiting investments, and carrying unlimited liability for the partnership.
Fund of funds (FoF): A vehicle that invests in other funds rather than directly in companies. Funds of funds are frequent early backers of emerging managers and often anchor first-time funds.
Sovereign wealth fund: A state-owned investment vehicle deploying national reserves. Sovereign investors write large tickets, apply strict governance thresholds and usually require an established track record. APAC & Greater China coverage
Family office: A private vehicle managing the wealth of one family (single-family office) or several (multi-family office). Typically faster to decide than institutions, with smaller tickets and appetite for co-investment.
Gatekeeper: An investment consultant or advisor that screens managers on behalf of institutional investors. In Japan, Korea and Australia, access to many pensions and insurers runs through gatekeepers.
Ticket size: The commitment amount a limited partner typically writes into a single fund. Mismatch between ticket size and fund size is one of the most common reasons an LP cannot participate.
Decision chain: The sequence of individuals and committees inside an allocator that must approve a commitment, from the coverage analyst to the investment committee and board.
Relationship intelligence: The structured view of interactions, warm paths and engagement strength between a fund team and an investor universe, used to prioritise outreach and detect relationship decay. What relationship intelligence actually means

Fund economics

Management fee: The annual fee charged on committed or invested capital to fund the manager's operations, commonly 1.5% to 2.0% during the investment period and stepping down thereafter.
Carried interest: The manager's share of fund profits above the hurdle rate, typically 20%, aligning the general partner with limited partner returns.
Hurdle rate: The minimum annualised return, usually 8%, that limited partners must receive before the manager participates in profits.
GP commitment: Capital the manager invests in its own fund, commonly 1% to 3% of total commitments, evidencing alignment with investors.
Catch-up: A distribution provision that allows the manager to receive an accelerated share of profits after the hurdle has been met, until the agreed profit split is restored.
Placement fee: The success fee paid to a placement agent on capital raised, generally between 1% and 2% of commitments introduced, sometimes offset against management fees. Engagement calculator
Capital call: A drawdown notice requiring limited partners to transfer a portion of their committed capital to fund an investment or expense.
Dry powder: Committed but not yet deployed capital held by funds. High dry powder levels increase competition for assets and can lengthen deployment periods.

Performance metrics

IRR (Internal Rate of Return): The annualised, time-weighted return of a fund's cash flows. Net IRR is reported after fees, expenses and carried interest.
TVPI: Total Value to Paid-In capital: the sum of distributions and residual value divided by capital drawn. It measures total value created, realised and unrealised.
DPI: Distributions to Paid-In capital: cash actually returned to limited partners relative to capital drawn. In slower exit environments, DPI has become the primary re-up test.
RVPI: Residual Value to Paid-In capital: the unrealised value still held in the portfolio relative to capital drawn.
MOIC: Multiple on Invested Capital: total value divided by invested capital, measured at the deal or fund level without a time dimension.
J-curve: The typical shape of fund returns over time: negative early as fees and costs precede value creation, then rising as investments mature and exit.
Vintage year: The year a fund makes its first investment or holds first close. Vintage is the basis for peer benchmarking of returns.
Re-up: A limited partner's commitment to a manager's successor fund. Re-up rates are one of the strongest signals of a manager's institutional standing.

Structuring & compliance

LPA (Limited Partnership Agreement): The governing contract of a fund, setting out economics, governance, investment restrictions, reporting obligations and the rights of limited partners.
Side letter: A bilateral agreement granting a specific limited partner terms that differ from the LPA, such as fee discounts, reporting rights or excuse provisions.
MFN clause: A most-favoured-nation provision allowing investors to elect terms granted to other limited partners in side letters, usually subject to commitment-size tiers.
AIFMD: The EU Alternative Investment Fund Managers Directive, governing marketing and management of alternative funds in Europe, including passporting and pre-marketing rules.
Reverse solicitation: A commitment made at the investor's own initiative, without marketing by the manager. Its scope has narrowed substantially under AIFMD II and it is not a reliable distribution strategy.
SFDR Article 8 / Article 9: EU sustainability disclosure classifications: Article 8 funds promote environmental or social characteristics, Article 9 funds pursue a sustainable investment objective. Many European LPs restrict allocations by classification. ESG-aligned investor matching
Singapore VCC: The Variable Capital Company, a Singapore fund structure widely used for regional feeders and sub-funds serving Asia-Pacific allocators. Fund placement in APAC
QDLP / QFLP: Quota-based Chinese programmes: QDLP lets qualified onshore investors allocate to offshore funds, QFLP lets foreign managers invest onshore. Both are licensed and municipality-dependent.
Feeder fund: A vehicle that pools investors from a specific jurisdiction or investor class and invests into a master fund, used frequently for Japanese and Korean institutional commitments.
Separately managed account (SMA): A dedicated portfolio managed for a single large investor under bespoke terms, mandate restrictions and reporting, often alongside a commingled fund.