What started as slang has grown to be pervasive across the financial industry.
In the private markets, dry powder refers to the amount of committed, but unallocated capital a firm has on hand. In other words, it’s unspent cash that is waiting to be invested.
A venture capital firm, for instance, could use some of its dry powder to invest in a promising healthtech startup. A private equity firm could use its dry powder stockpile to buyout a distressed company. Even a corporation can reserve its dry powder in preparation for an add-on acquisition.
