Fundraising and closing

First close

Also called Initial close, Initial closing.

Definition

A first close is the first date on which a fund's general partner accepts subscriptions and admits limited partners, at which point the partnership agreement takes effect, the fund can call capital and make investments, and the management fee usually begins to accrue. Investors admitted at later closes are brought to the same position through equalisation.

Updated October 9, 2026Checked against our editorial standards

Example

A fund targeting $50M holds its first close on 1 March 2026 with $18M from four LPs. The fund can now call capital and sign term sheets. The management fee of 2% a year on $18M of commitments, $90,000 for the first quarter, starts accruing from that date. On 1 September a second close adds $12M. The new LPs pay in their pro rata share of the capital called so far, plus an equalisation charge at the rate the LPA sets, so the March investors are made whole for having funded six months earlier. Within 15 days of the first sale, the fund files Form D showing $18M sold of $50M offered.

Confused with

Final close. The final close is the last admission of investors, after which the fund's size is fixed. There can be several closes between the two.

First sale. For Form D the deadline runs from the first sale, the date the first investor is irrevocably committed. That is usually the first close, but counsel confirms it rather than assuming.

In practice

Managers hold a first close with anchor LPs to show momentum, which means operating a fund on a small fee base for a time. The LPA's fundraising window, often twelve to eighteen months, runs from the first close, as do many other dates in the agreement, so the date is written down and reused for years.

Sources

Rule 503, filing of notice of sales on Form Dwww.ecfr.gov/current/title-17/chapter-II/part-230/subject-group-ECFR6e651a4c86c0795/section-230.503

Related terms

Final closeA final close is the last closing at which a fund admits limited partners or accepts increased commitments.
EqualisationEqualisation is the adjustment made at each closing after the first that requires incoming limited partners to contribute their pro rata share of capital already called, plus an equalisation interest charge set in the LPA, with the proceeds paid or credited to the LPs who funded earlier, so that all LPs hold the same proportion of every investment regardless of when they joined.
Form DForm D is the notice of exempt offering of securities that an issuer, including a private fund, must file with the SEC within 15 days of the first sale in an offering relying on Regulation D, disclosing the issuer, the exemption claimed, the amount sold and the total offering amount.
Management feeThe management fee is an annual charge paid by the fund to the management company, typically 2% of committed capital during the investment period, often stepping down afterwards to a lower rate or a basis of invested capital, to cover salaries, rent and the cost of running the firm.