Dry powder is the capital limited partners have committed to a fund that the general partner has not yet called down and invested — money that is available to deploy but is not yet at work in a portfolio company.
The limited partnership agreement, not any external rule, fixes how long a GP has to call and invest that capital: a defined investment period, commonly around five years, sometimes with GP-discretion extensions of a year or two, after which uncalled commitments are typically released back to limited partners unless the LPA lets the GP keep calling for follow-on investments in existing portfolio companies. The pressure dry powder puts on pricing follows directly from that clock: a GP holding capital committed to deploy within a fixed window, chasing a limited supply of investable Canadian businesses, has less room to walk away from a full asking price than one with no deadline.
No Canadian body Treadstone could verify publishes an aggregate figure for how much dry powder is sitting uncalled across Canadian PE and VC funds. What the Canadian Venture Capital and Private Equity Association does publish, in its H1 2026 market report, is realized deployment: $12.7 billion invested across 252 private equity deals and $2.69 billion across 250 venture deals in the first half of 2026. That is deployment, not dry powder — the two move together but are not the same number, and neither this glossary nor the CVCA report should be read as stating the second from the first.
A recycling provision is the other lever an LPA usually gives the GP over how much dry powder is available at any one time: many agreements let the GP return proceeds from an early, short-hold realization to the pool of capital it can still call, rather than treating that money as a final distribution. Recycling stretches how much a fund can invest without asking limited partners to commit more, but it is capped in the LPA itself — commonly to a stated multiple of committed capital or a defined window after the investment period closes — specifically so it cannot be used to quietly extend a fund's effective size past what limited partners agreed to.
Maple Ridge Capital Fund II, LP closed at $200,000,000 of commitments. Eighteen months into its five-year investment period it has called $140,000,000 across twelve deals and recycled $8,000,000 back into the callable pool from one early exit, leaving $68,000,000 of dry powder — capital the LPA still lets the GP call, but that has to find a home before the investment period's clock runs out.
See also: Limited partnership agreement · Independent sponsor · Co-investment right.
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