Commitment vs capital call
For many private market deals, the money you pledge isn't all required up front. Two distinct concepts govern the flow of funds:
Commitment
A commitment is your binding pledge to invest a specified amount in an asset. You make a commitment by signing the Investment Agreement during the deal's commitment window. From that moment, you're legally obligated to honour the full amount when called.
Capital Call
A capital call is the actual request to send funds. The deal sponsor issues capital calls (sometimes once, sometimes in tranches over time) drawing down against your commitment. Each call specifies an amount and a deadline by which the funds need to arrive.
How they relate
Your total commitment amount = the maximum you've pledged. Your paid-in capital = how much of that has actually been called and funded so far. The difference is your remaining commitment — what you may still be called for.
