Hard Commitments
Hard Commitments are binding or near-binding capital commitments from LPs—typically approved through IC and documented through subscription processes—subject to final legal execution and closing mechanics. Allocators evaluate hard commitments through conditions precedent, funding timelines, concentration risk, and whether the manager’s close process and legal readiness support reliable conversion into funded capital.
Hard commitments are materially different from soft circles: they represent real capital intent that has passed formal decision gates. Institutionally, even “hard” can have conditions—legal execution, KYC, side letter negotiation, and closing mechanics. The allocator lens focuses on reliability and process quality.
From an allocator perspective, hard commitments affect:
- close certainty and timeline,
- fund size and concentration,
- allocation capacity remaining, and
- execution risk (legal and operational).
How allocators define hard commitment risk drivers
Allocators segment hard commitments by:
- Documentation stage: IC-approved, subscription in process, executed docs pending close
- Conditions precedent: side letters, MFN, regulatory approvals, KYC/AML completion
- Funding timing: when capital is expected to be funded and at which close(s)
- Concentration risk: reliance on a small number of large tickets
- Execution readiness: manager’s legal readiness, data room completeness, closing mechanics
- Default risk: rare, but operational friction can create delays or reductions
- Evidence phrases: “approved,” “hard committed,” “subscription documents,” “side letter,” “closing”
Allocator framing:
“Are these hard commitments operationally and legally on track to close—or exposed to execution friction, conditions, and concentration risk that can disrupt fundraising math?”
Where hard commitments matter most
- when managers are timing first close and need credible anchor capital
- when capacity is limited and allocation windows are short
- when emerging managers need proof points for momentum and credibility
How hard commitments impact outcomes
- enable managers to hit close milestones and reduce fundraising risk
- improve credibility with subsequent LPs when communicated transparently
- can create false certainty if legal execution and side letters are not managed
- concentration on a few commitments increases fundraising fragility
How allocators evaluate hard commitment reliability
Conviction increases when managers:
- disclose conditions and expected closing timelines clearly
- manage side letters and legal execution professionally
- avoid over-concentration and have a diversified commitment base
- communicate capacity remaining honestly (not scarcity theater)
- run clean closing processes that respect LP operational workflows
What slows allocator decision-making
- side letter negotiation drag and unclear MFN frameworks
- KYC/AML delays and incomplete operational readiness
- aggressive close timelines that ignore institutional workflows
- overreliance on a single anchor that can renegotiate or delay
Common misconceptions
- “Hard commitment equals money in the bank” → legal and operational execution still matters.
- “More hard commitments means less risk” → concentration can still make the fund fragile.
- “Fast closes are always better” → speed without readiness increases errors and delays.
Key allocator questions
- What conditions remain before the commitment is fully closed?
- What is the expected closing timeline and what could delay it?
- How concentrated are commitments and what is the anchor dependency?
- What is the manager’s side letter and MFN approach?
- How clean is the operational process (KYC, execution, reporting readiness)?
Key Takeaways
- Hard commitments are real signals but still subject to execution mechanics
- Legal readiness and operational discipline determine close reliability
- Concentration risk must be managed alongside momentum