First Close
First close is the initial closing when LP commitments become effective and the fund begins operating.
Definition
First close is the first legally effective date the fund accepts LP subscriptions. After first close, the fund can typically begin calling capital, paying expenses under the LPA, and executing investments. Subsequent closes allow additional LPs to join under defined terms and true-up mechanics. Allocator Context First close is a practical milestone: it reduces execution risk (fund is “real,” not hypothetical) but also introduces timing tradeoffs. Some LPs prefer committing by first close to secure allocation access; others commit after first close to confirm early LP quality and operational readiness. Decision Authority Institutional LPs often need IC approval before first close if they want to be in early. If approvals come later, they may still invest but might require additional internal steps (updated memos, refreshed terms confirmation, or pacing re-checks). Why It Matters for Fundraising A clean first close signals operational maturity: documents are consistent, service providers are set, and onboarding is organized. Funds that repeatedly “slide” first close dates can trigger skepticism and reduce LP urgency. Key Takeaways Marks operational start of the fund Impacts LP timing and allocation access Requires clean docs and strong readiness Timeline stability improves close velocity