Dry Powder
Private Credit glossary · Fund Structures, Returns & Economics
Definition
Committed but uninvested capital.
Dry Powder in plain English
Dry powder is money an investment fund has already collected from its backers but hasn't spent yet — it's promised and sitting ready, waiting for the right opportunity. The name comes from old cannon warfare, where you needed dry gunpowder ready to fire the moment a target appeared; wet powder was useless. In investing, having lots of dry powder means a fund can pounce quickly when a great deal shows up, but it also earns nothing while it waits, so sitting on too much for too long is its own kind of problem.
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