An investor committing $5 million does not send $5 million. Calls arrive with short notice, often ten business days, in tranches over several years, and the total called can end up below the commitment if the fund does not deploy fully.
This creates a cash management problem. Committed but uncalled capital must be held in something liquid enough to meet a notice, which drags on the return of the overall portfolio, yet holding it all in cash means the effective return on the commitment is far below the fund's reported internal-rate-of-return.
Failing to meet a call is serious. Partnership agreements typically allow forfeiture of a significant share of the defaulting investor's existing interest, so commitments should be sized against worst-case liquidity, not expected liquidity. See dry-powder.
Related: dry-powder, private-equity, limited-partnership, internal-rate-of-return, j-curve, venture-capital