Dry powder.

Money a fund has been promised by its investors but has not spent yet, held in reserve for future deals.

Drafted with AI assistance. Not yet reviewed by a person · Last updated August 23, 2026

Source: U.S. Securities and Exchange Commission

In plain English

Dry powder is committed capital that a private fund can call on but has not yet deployed into investments. The money usually sits with the limited partners until the general partner issues a capital call for a specific deal. Industry watchers track total dry powder because a large pile of unspent money tends to push deal prices up as funds compete for the same targets. A fund with none left cannot act on an opportunity or support a struggling holding. The term is borrowed from gunpowder that had to be kept dry to be usable.

Most useful ages

28 to 65

01Why it matters

If you are an investor in a fund, undeployed commitments are still your obligation, and they earn nothing for you while they wait.

02The math, step by step

Say a fund closes on $500,000,000 of commitments and has invested $300,000,000 across eight deals. Dry powder is $500,000,000 minus $300,000,000, which is $200,000,000, or 40 percent of the fund still uncalled.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

Do not confuse with Cash sitting in the fund's bank account

Dry powder is mostly money still in the investors' hands, promised but not transferred. It is a commitment, not a balance. A fund with $200,000,000 of dry powder usually does not have $200,000,000 in an account.