In financial news, you often hear about record levels of Dry Powder. This term refers to the committed but unspent capital available to Private Equity and VC funds. It is money that has been raised but not yet deployed into companies.
High levels of dry powder are a double-edged sword. On one hand, it ensures a steady stream of investment into the economy. On the other, too much money chasing too few deals can drive up valuations, potentially lowering future returns. A disciplined manager knows when to sit on dry powder and when to strike.
