The Difference Between Capital Offered, Committed and Funded
Five words describe five different states of a transaction. Using them interchangeably is the fastest way to lose credibility with institutional counterparties, and, in some jurisdictions, to create legal exposure.
Introduced
A counterparty has been made aware of an opportunity and has agreed to review it. Nothing more. An introduction creates a conversation, not an obligation. Companies that describe introductions as interest, or advisers that describe them as pipeline, misrepresent the state of the process to themselves and to others.
Offered
A counterparty has expressed non-binding terms, typically a term sheet, letter of intent or indication of interest, describing the capital it would consider providing and on what conditions. An offer is a proposal to negotiate. It is subject to diligence, documentation, approvals and, frequently, conditions that have not yet been met. Capital offered is not capital available.
Committed
A counterparty has executed binding documentation obligating it to provide capital, subject only to the closing conditions specified in that documentation. Commitment is a legal state, not a verbal one. An investment committee approval, a handshake or an email confirming intent does not constitute commitment until the definitive agreement is signed.
“Commitment is a legal state, not a verbal one.”
Closed and funded
Closing is the moment at which the definitive agreements become effective and conditions have been satisfied or waived. Funding is the moment at which money moves. These are usually simultaneous but not always: staged closings, tranched facilities and milestone-based draws can separate them by months or years. A transaction that has closed with a first tranche funded should be described exactly that way.
Why precision matters
Investors, lenders and strategic partners calibrate their own decisions on the stated status of a process. A company that describes offered capital as committed invites a counterparty to rely on something that does not exist. Beyond the reputational cost, statements about capital status can carry regulatory weight depending on the jurisdiction and the audience. Amor Fati Group treats these five terms as distinct in every conversation, document and public statement, and encourages the companies it works with to do the same.
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