Commitment (Committed Capital)

In private equity investments, for example, the investor commits to investing a certain amount. This planned investment is usually called up by the individual venture capital firms or limited partnerships (see Limited Partnerships) not in one go, but in stages. The total investment sum to which the investor has committed is referred to as commitment or committed capital. In the build-up phase of a private equity portfolio, it is therefore often the case that the market value of the portfolio is lower than the commitment.