How does recycling work venture capital?

Put simply, recycling gives funds one or even a few “extra shots on goal”, as they can re-invest money on early exits. This can end up making the difference between a top quartile and a top decile fund (but also the other way around, if you’re not the type to use your extra shots wisely).

What does recycling mean in private equity?

The idea behind recycling is fairly simple. By taking proceeds and re-investing them into companies, GPs can take more shots on goal (in the case of new investments) or capture additional proceeds from existing top-performing portfolio companies (in the case of high potential follow-ons).

What is capital recycling?

The second is what we call “capital recycling.” This is when a long-term strategy is put into place, collateralized lines of credit are used to meet the opportunities and obligations along the way and cash flow is used to pay down the lines of credit, so the money is available in the future.

What is recallable distribution?

A recallable distribution is a distribution to LPs that GPs have the right to call again for the purpose of investing. This is a term that gets negotiated at the time of the fund’s formation. A GP will distribute capital to LPs that is the result of calling more capital than is necessary for an investment.

What are recallable distributions?

A recallable distribution is a distribution to LPs that GPs have the right to call again for the purpose of investing. A GP will distribute capital to LPs that is the result of calling more capital than is necessary for an investment. This is commonly referred to as a return of excess capital called.

What is asset Redeployability?

Asset redeployability is the extent to which assets have alternative uses outside the firm. • Less redeployable assets have lower liquidation values.

What is recallable capital in private equity?

Returned capital that has been distributed that can be recalled by the manager, being a portion of the capital that is recallable once it has been distributed. The existence of recallable capital increases investors’ remaining capital commitments.

What is a recallable capital commitment?

Recallable Capital (Base Currency) Represents distributed capital which may or may not be recalled from an investor. Recallable capital increases unfunded commitments. Unfunded Commitments (Base Currency) This is the balance of the Total Client Commitment to the Investment which remains to be called for the Investment.

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