> The way capital calls have been described to me is that limited partners just say they have a certain amount of capital available, and at any time the VC PE fund just requests/demands it from your bank account? Which seems a little odd and inconvenient to me.
This is essentially how it works. The alternative is the following:
Let's say you raise a $1B fund and everyone gives you cash up front. That $1B is effectively going down in the value if it just sits there in cash.
I like the hedge fund + side pocket model way more then
About time that these big VCs are catching up to it
The side pocket is a private equity fund, and limited partners can always create additional subscriptions if they want to invest more into the main fund as long as they meet the minimums
I don't disagree but this is really only possible with sources of cheap capital. Rolling funds are not easy to maintain and very risky on the GP side of things.
Restrictions and limitations on redemptions from the liquid fund already solve this.
And money in the side pocket can be kept forever in long term positions. Even to an LP that previously did a full redemption, the liquidity events from the side pocket can result in an infinitely long redemption.
This is essentially how it works. The alternative is the following:
Let's say you raise a $1B fund and everyone gives you cash up front. That $1B is effectively going down in the value if it just sits there in cash.