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Fund Formation & Management Resources

Hard and Soft Commitments for VC

The guide to understanding soft and hard circled commitments to maximize fundraising success.

In venture capital fundraising, understanding the distinction between soft circled and hard circled limited partners is crucial. Soft circled partners express interest in investing, while hard circled partners commit to a specific investment amount. This article will outline how to identify soft and hard circled limited partners, guide you through the identification process, discuss the importance of regular communication, and explore the role of geography in closing probabilities to help you maximize your fundraising success.

What is Soft and Hard Circled

Soft Circled Limited Partners:

Soft circled limited partners express interest in investing a specific amount or range, but they typically have additional questions or require further steps to finalize the investment. The probability of closing a deal with a soft circled commitment ranges from 10% to 25%.

Hard Circled Limited Partners:

Hard circled limited partners commit to investing a specific amount and often request final paperwork or outline their desire to send the closing amount. They usually sign a commitment letter, like the PACT, and the probability of closing with them ranges from 50% to 75%.

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Hard and Soft Commitments for VC 6

Specifying a Number

Without hearing a specific number from a limited partner, it is impossible to determine if they are soft or hard circled. It is essential to gauge their level of commitment and obtain a clear number to classify them accurately.


Limited Partner: “We’re interested in your venture capital fund and believe it aligns well with our investment strategy. We’re currently considering an investment of around $500K to $750K, but we’d like to review the due diligence materials and discuss the fund terms before making a final decision.”

Determination: Soft Circled for $500K

Limited Partner: “After evaluating your fund’s performance and strategy, we’ve decided to commit $1.5 MM. Please send us the final paperwork and let us know the next steps in the process.”

Determination: Hard Circled for $1.5 MM

Limited Partner: “Our team has reviewed your fund and we’re ready to move forward with a $2 MM investment. We just signed the PACT and are waiting for the closing documents.”

Determination: Hard Circled for $2.0 MM

Limited Partner: “Your fund’s focus on emerging technologies has caught our attention. We’re contemplating an investment, but we need to discuss it further with our investment committee and have a follow-up meeting with you to address some questions.”

Determination: Nothing

Getting a Commitment

In most cases, if there is no commitment from a limited partner after three meetings, the likelihood of getting someone soft or hard circled is very low. The recommendation is to add them to a mailing list. Larger institutions and family offices may require more meetings to close, but typically, a specific number can be reached within three meetings. Here are three ways to ask for a commitment by a limited partner in a meeting, ranging from passive to direct approaches:

  • Passive Approach: You can casually mention the fund’s closing date or an upcoming investment round, which might prompt the limited partner to reveal their intentions. For example, you could say, “Our fund is closing its next round in a few weeks, and we’re excited about the opportunities we’ve identified. If you’re interested in learning more, please let me know.”
  • Indirect Approach: You can ask about their decision-making process or timeline, giving them an opportunity to express their level of commitment. For instance, you could ask, “We’ve had some great discussions so far. Can you share more about your decision-making process or the timeline you envision for making an investment decision?”
  • Direct Approach: You can be upfront and ask the limited partner about their commitment directly. For example, you could say, “We’ve had a few productive meetings, and we’d like to know if you’re interested in committing to our fund. Can you share your thoughts on the investment amount you’re considering, or if you need any additional information to make a decision?”

By using a range of approaches, from passive to direct, you can gauge the level of commitment from a limited partner while adapting to their communication style and preferences. This can help you better understand their position and, ultimately, secure the necessary commitments for your venture capital fund.

Staying in Touch

Maintaining regular communication with limited partners is vital to increase the probability of closing. It helps in addressing any concerns, clarifying doubts, and ensuring that the investment process moves forward smoothly. Here are three effective ways general partners can stay in regular contact with limited partners:

  • Monthly Newsletter: A well-crafted monthly newsletter can keep limited partners informed about the venture capital fund’s progress, updates on the portfolio companies, industry trends, and any new investment opportunities. This consistent communication helps build trust and demonstrates transparency, which can lead to stronger relationships with limited partners.
  • Personal Check-ins: Periodic one-on-one check-ins, either through email, text messages or phone calls, builds rapport and provides limited partners an opportunity to share any concerns or questions. These personal check-ins demonstrate that the general partner values the relationship and is willing to address any issues directly. It also builds a stronger relationship of trust between the limited partner and the general partner.
  • Event Invitations: Inviting limited partners to exclusive events, such as webinars, panel discussions, or networking functions, can strengthen relationships and provide valuable learning opportunities. These events enable limited partners to engage with the general partner, the portfolio companies, and other industry experts, fostering a sense of community and collaboration.

By employing a combination of monthly newsletters, personal check-ins, and event invitations, general partners can maintain regular communication with limited partners, ensuring that concerns are addressed promptly, and the relationship remains strong throughout the investment process.

Closing Strategies

When aiming to close on $2 MM in a developed market and with sophisticated limited partners, it is advisable to secure both hard and soft circled commitments, factoring in their respective closing probabilities of 75% and 25%. For instance:

($2 MM * 75%) + ($2 MM * 25%) = $1.5 MM + $0.5 MM = $2 MM Raised
$4 MM in Commitments Needed

In developing regions and with unsophisticated limited partners, the closing probabilities for soft and hard commitments tend to be lower. For example, with a 50% closing probability for hard commitments and a 10% closing probability, you would need the following to reach the same $2 MM goal:

($3 MM * 50%) + ($5 MM * 10%) = $1.5 MM + $0.5 MM = $2 MM Raised
$8 MM in Commitments Needed

By adjusting your fundraising strategy based on the likelihood of closing commitments in different markets, you can ensure that you are well-positioned to achieve your target funding goals.

Closing Probabilities

Geography and sophistication can play a significant role in closing probabilities. Limited partners in developing markets or those unfamiliar with venture capital tend to have lower percentages of closing probability. Here are some reasons why limited partners may be less likely to commit:

  • 1. Limited familiarity with venture capital: Venture capital may be a relatively new concept for many potential investors. Limited partners may lack the experience or knowledge to navigate the venture capital landscape confidently, making them hesitant to commit.
  • 2. Regulatory and legal hurdles: Developing nations may have complex regulatory environments or less developed legal frameworks that could pose challenges to limited partners when making venture capital investments. This uncertainty could deter them from fully committing to a fund.
  • 3. Economic instability: Limited partners in developing nations may be concerned about economic stability and market volatility, which could affect the potential returns on their venture capital investments. These concerns may lead them to be more cautious about committing funds.
  • 4. Currency risk: Exchange rate fluctuations can impact the returns on venture capital investments. Limited partners in developing nations may be hesitant to invest due to concerns about potential currency risks and the impact on their returns.
  • 5. Access to quality deal flow: Limited partners in developing nations might perceive a lack of access to high-quality investment opportunities or a smaller pool of promising startups compared to more established markets. This perception could limit their willingness to commit to venture capital funds.

In some cases, limited partners in developing nations may even sign LPAs (Limited Partnership Agreements) but fail to wire the funds. By understanding these challenges and addressing the concerns of limited partners in developing markets, general partners can improve their chances of securing the necessary funds for their investments.


Understanding the differences between soft and hard circled limited partners is crucial in the venture capital fundraising process. By recognizing these distinctions, maintaining regular communication, and considering factors like geography, general partners can improve their chances of securing the funds they need to support their investments.