Returns & Metrics
What is TVPI in venture capital?
Quick Answer
TVPI (Total Value to Paid-In) measures the total value of a fund relative to the capital called from LPs. It combines realized returns (distributions) plus unrealized portfolio value (NAV). TVPI = (Distributions + NAV) ÷ Paid-In Capital.
Detailed Answer
TVPI is the primary multiple used to measure VC fund performance. It captures both realized returns and the estimated value of remaining investments.
Formula: TVPI = (Cumulative Distributions + Net Asset Value) ÷ Total Paid-In Capital
Breaking it down: - **DPI (Distributions to Paid-In)** — Cash actually returned to LPs (realized) - **RVPI (Residual Value to Paid-In)** — Unrealized value still in portfolio - **TVPI = DPI + RVPI**
Example: A fund has called $80M of $100M committed. It has distributed $60M back to LPs and the remaining portfolio is valued at $100M. - DPI = $60M ÷ $80M = 0.75x - RVPI = $100M ÷ $80M = 1.25x - TVPI = 0.75x + 1.25x = 2.0x
TVPI benchmarks (net to LPs): - Top quartile: >2.0x - Median: 1.3-1.6x - Bottom quartile: <1.0x (losing money)
Caveat: Early in a fund's life, TVPI is dominated by RVPI (unrealized, estimated values). DPI is more reliable because it represents actual cash returned. As LPs say: "You can't eat TVPI" — only DPI is real money.
Related Questions
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What is MOIC (Multiple on Invested Capital)?
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