When the Capital Call Comes, Will You Actually Have the Money?
Many VC fund investors treat committed capital as liquid cash. It isn't. And the gap between those two assumptions is where capital call problems start. Here's why it matters, and what to do about it.
Chris had done everything right.
He'd committed $750,000 to a promising early-stage fund run by a team he trusted. He'd read the subscription agreement. He understood that capital would be called in stages over several years. He'd mentally set the money aside, noted it in a spreadsheet, told herself it was "basically gone."
What he hadn't done was actually separate it from the rest of her accounts.
When the capital call for $150,000 arrived, eighteen months after he signed, her investment portfolio had taken a hit in a turbulent equity market. Her margin account was under pressure. He had a business line of credit renewal coming up and was keeping more cash on hand than usual. The part of $750,000 he'd committed was technically still there but it was threaded through the same accounts as everything else he owned, and pulling it out without disrupting her broader financial picture was more complicated than he'd expected.
He made the call. But it was stressful, and close.
The Quiet Problem of Commingled Capital
Chris's situation is entirely fictitious, but entirely recognizable to anyone who works in private fund administration. And it illustrates the core challenge of LP capital management in venture investing. Committed capital exists in a peculiar in-between state: it belongs legally to the LP until the call, but it's been promised to the fund. It's not deployed, but it's not freely available either. It has a future job, and a specific deadline to be ready for.
Many LPs treat it like ordinary cash. That's understandable because it looks like cash, it lives in the same accounts as cash, and for most of the time it sits there, it behaves like cash. The problem emerges at the edges: when markets move, when life throws a curveball, when the committed balance and the broader portfolio start competing for the same pool of liquidity.
Canada's VC dry powder, calculated as the aggregate of all committed-but-uncalled LP capital across active funds, stood at $11.5 billion at year-end 2025, according to BDC's annual landscape study. That figure has been sitting in LP accounts, mostly commingled, mostly unstructured, for an average of three to five years per commitment cycle. And the window is getting longer: deal count in the Canadian VC market dropped 34% between 2021 and 2025 as capital concentrated into fewer, larger transactions.
RBCx's 2025 Capital Under Pressure report found that 58% of that dry powder is reserved specifically for follow-on investments in existing portfolio companies; meaning a significant portion of committed LP capital may sit uncalled for years beyond the initial fund deployment period. LPs who signed subscription agreements in 2022 are, in many cases, still carrying meaningful uncalled balances as of today.
The Four Ways It Goes Wrong
Commingled LP capital doesn't fail dramatically. It fails at the margins, and usually at the worst possible time.
The most common failure mode is the unintentional drawdown: over a multi-year window, day-to-day financial decisions - a home renovation, a business investment, a portfolio rebalancing - quietly erode the cushion the LP was counting on. By the time the call arrives, the balance is lower than expected.
The second is margin and leverage exposure. LP committed capital sitting in a margin-enabled brokerage account is vulnerable to exactly the kind of forced liquidation that margin agreements are designed to trigger. A 20% equity market decline can produce a margin call that forces the sale of assets the LP considered untouchable.
The third is what behavioural economists call "mental accounting" error: without a dedicated account, most LPs track their committed capital position informally, in a spreadsheet, in their head, in a rough sense of "I've set that aside." Multi-year windows with multiple calls, in multiple funds, compound the error significantly.
The fourth is simply foregone return. Committed capital sitting in cash or in a general account earns whatever the account earns, which, for money earmarked to a specific future purpose, is almost always less than it could.
The Fix Is Structural, Not Strategic
The solution doesn't require a different investment philosophy or a more sophisticated portfolio strategy. It requires an account.
A dedicated account specifically purposed for committed LP capital, structurally separated from personal and corporate assets, invested in options calibrated to the fund's call schedule changes the risk profile on all four of the above failure modes simultaneously. The capital can't be inadvertently drawn on. It isn't exposed to margin positions. Its balance is clearly visible. And it earns a modest but real return during a window that would otherwise generate nothing.
Private Capital Group Solutions provides that account structure through a group plan framework built on Canada's $500 billion workplace savings infrastructure. It’s the same model that manages segregated capital for millions of Canadians in employer-sponsored retirement plans. For an LP, the cost is a transparent MER of basis points on account assets while the capital sits separate, earns returns, and remains structurally available when the call arrives. The GP pays nothing.
Chris, in our opening scenario, didn't need a better investment strategy. He needed a better account. The two things are entirely different and only one of them addresses the problem he actually had.
To understand what a PCGS account looks like for your LP situation, reach us at contact@privatecapitalgroup.ca