Early in a fund’s life cycle, contributions to the fund by LPs exceed distributions as the manager makes new investments. When the manager identifies an investment, a “capital call” is sent to the LPs that have made commitments to the fund. As the fund matures and the manager exits investments, the fund makes distributions to investors. In this case, distributions to LPs overtake contributions in Year 4, and LPs recoup all called capital between Year 6 and Year 7. Distributions in Year 7 through Year 10 are all profits to the LPs...
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