Dry Powder

Dry powder refers to the amount of capital or cash reserves that a private equity or venture capital firm has available to invest. It represents committed capital from limited partners that has not yet been deployed into new acquisitions or investments. Firms aim to maintain adequate dry powder, typically $1 billion or more, to capitalize on investment opportunities as they arise. Having dry powder is crucial so firms can act quickly when promising deals become available. Too much dry powder can indicate a firm is having difficulty finding attractive investments whereas too little limits a firm's ability to pursue deals. Firms strive for the ideal amount of dry powder to deploy capital efficiently while remaining sufficiently liquid.

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