Dry Powder

DEFINITION of 'Dry Powder'

A slang term referring to marketable securities that are highly liquid and considered cash-like. Dry powder may also refer to cash reserves kept on hand to cover future obligations or purchase assets, if conditions are favorable. Securities considered to be dry powder could be Treasuries, or other fixed income investments, and can be liquidated on short notice, in order to provide emergency operational funding or allow an investor to purchase assets.

INVESTOPEDIA EXPLAINS 'Dry Powder'

Having dry powder on hand can provide businesses and investors with an advantage over others holding less liquid assets. For example, if a venture capitalist expects IPO markets to sour, you might hear him say something like, "we want to keep enough dry powder around to keep funding our companies through these hard times."