Raising and closing
Hard cap
The maximum total commitments a fund will accept.
It is written into the LPA. Managers set it to protect strategy and returns, since a fund that grows too large may not be able to deploy well. A target size is the goal, and the hard cap is the ceiling.
Why it matters when you raise
Closing above target and under the cap is a positive signal, and LPs pay attention when a fund is oversubscribed.
Related terms