# Fund Lifecycle A closed-end private equity or private credit fund moves through four broadly defined phases over its life — typically 10–12 years from first close to wind-down. Each phase has distinct rules for when capital is called, how fees are calculated, and when distributions flow back to LPs. ## Phase 1 — Fundraising The GP markets the fund, collects LP subscriptions, and holds closes. Capital calls during this phase are limited: management fees may be called from first-close LPs, but no deployment capital is drawn until at least a first close is complete. The fundraising period typically ends at a final close or at a hard deadline stated in the LPA. Key events: * **First close** — fund is constituted; GP can begin investing and calling capital. * **Subsequent closes** — additional LPs admitted; each pays an equalization true-up. * **Final close** — fundraising ends; no new LPs can be admitted. See [Fund Close](/fund-mechanics/fund-close.md), [First Close](/fund-mechanics/first-close.md), and [Subsequent Close](/fund-mechanics/subsequent-close.md). ## Phase 2 — Investment Period The active deployment phase, typically 3–5 years from first close. The GP calls capital regularly to fund new investments, follow-ons, and fund expenses. Management fees are usually charged on **committed capital** during this period. At the end of the investment period (either by calendar date or by LP vote), the GP loses the right to call capital for new investments — only follow-on investments in existing portfolio companies and fund expenses remain callable. See management fees and [Capital Calls overview](/capital-calls/overview.md). ## Phase 3 — Harvesting The GP manages and exits portfolio positions. Capital calls for new investments stop; capital may still be called for follow-ons or operating expenses. Management fees typically **step down** at the end of the investment period — the basis shifts from committed capital to invested capital or NAV. Distributions begin flowing back to LPs as exits close. Distributions are sequenced through the waterfall: return of capital first, then preferred return, then carry. See distribution waterfall and fee step-down for details. ## Phase 4 — Wind-Down Remaining positions are exited or written off. All net proceeds are distributed to LPs per the waterfall. The fund terminates when all positions are liquidated, final audits are complete, and the GP issues a final fund-close notice. If the GP received excess carried interest under a deal-by-deal waterfall, a **clawback** calculation is performed at this stage. ## How Gildi Tracks the Lifecycle Gildi stores the fund's current phase and applies the appropriate fee-basis rules automatically at each step-down event. The dashboard displays the active phase, the investment period end date, and the remaining callable commitment per LP. GPs configure step-down triggers (date-based or event-based) in the fund settings. Gildi recalculates management fee amounts on the next capital call after the trigger fires and flags the change in the GP's activity feed. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.gildi.io/fund-mechanics/fund-lifecycle.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.