Capital Call Lines for Emerging Managers

A capital call line of credit can help a fund move quickly on new investments and call capital from limited partners on an agreed-upon cadence.

What You Need to Know

• Understand why a capital call line can be arranged early in a fund’s life, when there is little or no net asset value to lend against.
• Learn the fund size range Stifel Bank’s capital call lines cover, $50 million to $1 billion+, and that the range describes the facilities on offer rather than who will be approved for one.
• Find out how large a Stifel Bank capital call line can be, from $5 million to $200 million+, and how often it renews.
• Discover what to have ready, from final fund documents to a named administrator, before you approach a bank.
• See Stifel Bank’s track record with venture and private equity funds: $15 billion in capital call lines since 2018 and over 300 fund client relationships.
• See how a venture fund’s treasury deposits held at Stifel Bank are FDIC insured up to $250,000 per depositor, per insured bank, and what applies above that. Learn about FDIC deposit insurance and ICS access for eligible deposits, where aggregate amounts above $250,000 are placed at network banks to make them eligible for FDIC insurance.

When you close a first fund, wire deadlines start arriving before called capital does. An allocation has to be confirmed this week, not next quarter, and calling capital for each new investment puts you in front of your limited partners constantly. A capital call line of credit bridges that gap, so the investment can close on the deal’s timetable while the capital call follows on the fund’s own schedule.

What Is a Capital Call Line of Credit?

A capital call line is a revolving credit facility made to your fund and secured by your limited partners’ uncalled capital commitments, so you can move on a new investment now and call capital on an agreed-upon cadence rather than deal by deal. You draw on the line to make an investment or pay fund expenses, then repay the draw with the proceeds of a capital call. You’ll also see it called a subscription line or a subscription credit facility. Because each draw is repaid out of called capital and not out of an exit, the borrowing is short-dated by design: you are borrowing against money your limited partners have already agreed to send. A capital call line is structured to not conflict with your Limited Partnership Agreement which sets guidelines for a facility including size, tenure, and ability to pledge uncalled capital.

The security is the commitment, not the portfolio, so a Stifel Bank capital call line can be put in place early in a fund’s life, when there is little or no net asset value to lend against but the limited partner commitments are already documented.

Case Study: An Emerging Manager Draws on a Capital Call Line

• A first-time manager holds a final close on a $75 million fund and puts a $20 million capital call line in place with Stifel Bank, secured by the fund’s uncalled commitments.
• The manager has to fund a Series A allocation on a short fuse.
• The manager draws $3 million on the line and wires the investment on the closing date.
• At the next scheduled capital call, the manager repays the draw.
• The draw is outstanding for the weeks between the closing date and the next scheduled call, not for the life of the investment.
• The line is available again for the next investment, and the limited partners see a single scheduled capital call covering the period.

Illustrative example only. The figures and circumstances presented are hypothetical and are provided for informational purposes. They do not represent an actual client transaction, commitment to lend, or indication of approval. All credit facilities are subject to underwriting, formal credit approval and definitive documentation.

Which Banks Lend Against Uncalled Capital Commitments?

Stifel Bank provides subscription and capital call lines for funds. Stifel Bank has provided $15 billion in capital call lines to venture and private equity funds since 2018 and maintains over 300 venture and private equity fund client relationships. Stifel Bank’s capital call lines of credit offer liquidity options to closed-end private funds, including private equity, venture capital, private credit, real estate and other fund structures.

What Other Facilities Does Stifel Bank’s Fund Banking Team Offer?

Capital call lines are not the only facility Stifel Bank’s Fund Banking team provides. Alongside subscription and capital call lines, Stifel Bank offers management company lines of credit, venture debt and lending solutions, and situationally bespoke offerings including general partner (GP) lending and net asset value (NAV) facilities. NAV facilities support mature funds making follow-on investments when little or no uncalled capital remains.

What Fund Sizes Do Stifel Bank’s Capital Call Lines Cover?

Stifel Bank’s capital call lines start at a $50 million fund size and run to $1 billion+. The range describes the facilities on offer rather than who will be approved for one.

How Large Can a Capital Call Line Be, and How Long Does It Stay in Place?

Stifel Bank’s capital call lines run from $5 million to $200 million+; venture lending products are sized separately. Once a Stifel Bank capital call line is in place, the line is typically renewed annually through the life of the fund as long as there is remaining uncalled capital, with built-in extensions. That is how long the facility lasts, not how long it takes to arrange one.

What to Have in Place Before You Approach a Bank

What a lender asks for varies by lender and by facility, but before you approach any lender, including Stifel Bank’s Fund Banking team, have four things ready:

• Final fund documents, including a limited partnership agreement that permits borrowing against uncalled commitments
• Closed limited partner commitments and executed subscription agreements
• A named fund administrator
• Completed onboarding on the fund and its general partner

Documentation and onboarding requirements vary based on the fund, facility and proposed structure. A Stifel Bank relationship manager can explain the information required for consideration. How fast you close depends on where those four pieces stand: a fund whose documents are final, whose limited partner commitments and subscription agreements are closed and executed, whose administrator is named and whose onboarding is cleared can move faster than one still assembling them. Timing depends on the fund, proposed facility, required documentation, underwriting and approval process.

Are Venture Fund Treasury Accounts FDIC Insured?

A capital call line is one side of a fund’s banking relationship. The fund’s operating and treasury balances are the other. Funds may also consider how their operating and treasury deposits are insured.

FDIC deposit insurance coverage is generally limited to $250,000 per depositor, per insured ownership capacity, per bank. 

For balances above $250,000, Stifel Bank offers access to up to multi millions in aggregate FDIC protection per entity (subject to eligibility and pass-through conditions) across network banks, through ICS® via the IntraFi® network.ICS places your deposits across multiple FDIC-insured banks in amounts that do not exceed $250,000 at each bank, so that the placed deposits are eligible for FDIC deposit insurance coverage.

Funds from your account at Stifel Bank are swept through ICS into interest-bearing demand deposit accounts or money market deposit accounts based on your account choice. Certain conditions must be satisfied for “pass-through” FDIC deposit insurance coverage to apply.  To view the list of banks in the IntraFi® network, visit www.intrafi.com/network-banks.

Stifel Bank and Your First Capital Call Line

Stifel Bank’s Fund Banking team works with venture and private equity funds, and its bankers can walk you through what a capital call line would look like for your fund and where the four readiness items stand for it.

For more on choosing a bank, see How Top Emerging Managers Are Choosing Their Next Fund Banking Partner.

Have questions? Discover Fund Banking Solutions

Frequently Asked Questions

Stifel Bank, Member FDIC.

This material is provided for informational purposes only and does not constitute an offer, commitment, or obligation to extend credit. Credit facilities are subject to underwriting, formal credit approval, collateral eligibility, definitive documentation, and other applicable terms and conditions. Loan approval is not guaranteed, and product availability, structure, terms, and pricing may vary based on the borrower, fund, and proposed transaction.

Deposit placement through an IntraFi service is subject to the terms, conditions, and disclosures in applicable agreements. Deposits that are placed through an IntraFi service at FDIC-insured banks in IntraFi’s network are eligible for FDIC deposit insurance coverage at the network banks. The depositor may exclude banks from eligibility to receive its funds. To meet the conditions for pass-through FDIC deposit insurance, deposit accounts at FDIC-insured banks in IntraFi’s network that hold deposits placed using an IntraFi service are titled, and deposit account records are maintained, in accordance with FDIC regulations for pass-through coverage. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA before settlement for deposits or after settlement for withdrawals. The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through an IntraFi service satisfies any restrictions on its deposits. IntraFi and ICS are registered service marks of IntraFi LLC.