DPI vs. TVPI: Which Fund Metric Actually Matters Now

DPI vs. TVPI: Which Fund Metric Actually Matters Now

Venture fund performance is usually summarised in a handful of ratios. For years, many managers highlighted TVPI, which includes the estimated value of companies still in the portfolio. After the valuation reset that followed 2021 and a long slowdown in exits, many LPs have shifted their attention to DPI, which counts only cash actually returned.

The phrase "DPI is the new TVPI" captures that change. This guide explains what each metric means, how they relate, how to interpret them at different stages of a fund's life, and why cash returned has become the number LPs care about most.

1. The Key Metrics

• Paid-in capital: the amount LPs have actually contributed to the fund so far.
• DPI (Distributions to Paid-In): cash and stock distributed to LPs divided by paid-in capital. It measures realised returns.
• RVPI (Residual Value to Paid-In): the current estimated value of remaining holdings divided by paid-in capital. It measures unrealised value.
• TVPI (Total Value to Paid-In): DPI plus RVPI. It measures total value, realised and unrealised.
• IRR (Internal Rate of Return): an annualised return that accounts for the timing of cash flows.

2. A Simple Example

An LP has paid in $10 million. The fund has distributed $5 million and holds remaining investments valued at $20 million.

• DPI = $5M / $10M = 0.5x
• RVPI = $20M / $10M = 2.0x
• TVPI = 0.5x + 2.0x = 2.5x

The fund looks strong on TVPI, but most of that value is still an estimate. Only half of the LP's money has actually come back.

3. Why DPI Has Become the Focus

• Marks can be wrong. Many private company valuations set during 2021 later proved too high, and some portfolios took time to reflect that.
• Exits slowed. Fewer IPOs and acquisitions meant less cash returned, making realised returns scarce.
• LPs need liquidity to meet other commitments and rebalance portfolios.
• Fundraising pressure. Managers raising new funds are increasingly asked to show cash returned from earlier ones.

4. Interpreting Metrics by Fund Age

• Early years (roughly 1–4): DPI is usually near zero, and TVPI often dips below 1x because of fees and early write-downs, a pattern known as the J-curve.
• Middle years (roughly 5–8): TVPI should reflect portfolio progress, and DPI starts to build as early exits arrive.
• Later years (8+): DPI should account for most of TVPI. A mature fund with high TVPI but low DPI raises questions about valuations or exit prospects.

5. How LPs Should Use These Metrics

1. Look at both. TVPI shows potential; DPI shows proof.
2. Compare by vintage year, since funds started in the same year face similar markets.
3. Check valuation methods behind RVPI, and whether marks have been updated. See fund administration platforms.
4. Ask about the path to liquidity for the largest holdings, including secondaries and continuation funds. See continuation funds.
5. Consider IRR alongside multiples, since timing matters.

For fund economics more broadly, see how VC funds make money and becoming an LP.

Frequently Asked Questions

What is a good DPI for a venture fund?

It depends on the fund's age. A mature fund returning well over 1x is returning more than LPs invested; top-performing funds return multiples of capital.

Why can TVPI be misleading?

Because it includes estimated values of private holdings, which may be optimistic or out of date until companies are sold.

Is IRR better than DPI or TVPI?

IRR captures timing but can be influenced by early exits or credit lines. Most LPs look at IRR alongside DPI and TVPI.

Why do new funds have low DPI?

Because venture investments take years to exit. Low DPI in early years is normal.

The Bottom Line

TVPI shows what a fund could be worth; DPI shows what it has actually returned. In a market where exits have been scarce and valuations uncertain, LPs increasingly treat DPI as the most reliable measure of success, while using TVPI and IRR to understand the full picture.

Global Capital Network connects LPs and fund managers through our events and investor network. Get in touch to learn more.

This article is general information, not investment advice. The example is illustrative.