TVPI vs DPI: Which Fund Performance Metric Matters More?

TVPI (Total Value to Paid-In capital) is a core private fund performance metric that compares everything a fund is worth to the capital that limited partners (LPs) have actually contributed. Formally, TVPI = (Distributions + Residual Value) / Paid-In Capital. Distributions are cash or stock already returned to LPs; residual value is the current fair market value of the remaining portfolio. A TVPI of 2.0x means that, on paper, the fund is worth twice what LPs have put in, combining realized and unrealized value. TVPI is especially important in the first half of a fund’s life, when most investments are still unrealized and DPI is naturally low. LPs use TVPI to benchmark managers by vintage year, compare funds at similar ages, and assess whether a portfolio is on track to hit target multiples, even before exits have fully materialized.

DPI (Distributions to Paid-In capital) measures how much cash or stock a fund has actually returned to its limited partners relative to what they invested. The formula is simple: DPI = Cumulative Distributions / Paid-In Capital. A DPI of 1.0x means LPs have received back exactly their contributed capital; 2.0x means they’ve received twice their money back in realized proceeds. Unlike TVPI, DPI ignores any unrealized portfolio value — it only counts exits and other distributions that have already happened. Early in a fund’s life, DPI is usually low because most positions are still held. As the fund matures and companies exit, DPI should steadily rise and eventually converge with TVPI. LPs rely on DPI as the ultimate proof of a manager’s ability to turn paper gains into real liquidity, especially when evaluating older funds and deciding whether to re-up with a GP.

For early-stage startups and founders, TVPI is more visible in the early years of a fund and signals how well your investors’ portfolios are compounding on paper. However, DPI becomes more important as a fund ages because it reveals whether your investors can actually convert paper gains into exits. A fund with strong TVPI but weak DPI late in its life is under pressure to sell, which can shape board dynamics and exit timing. Founders should therefore look at both: TVPI to understand current fund health and risk appetite, and DPI to gauge how much liquidity pressure might influence their investors’ behavior.

Sequoia-style Fund X raised $100M in 2019. By 2024, the GP has called the full $100M. They’ve already distributed $80M in cash from a few strong exits. The remaining portfolio — several late-stage companies still private — is marked at a fair market value of $120M. TVPI is calculated as (Distributions + Residual Value) / Paid-In = ($80M + $120M) / $100M = 2.0x. DPI is Distributions / Paid-In = $80M / $100M = 0.8x. On paper, the fund looks excellent: a 2.0x TVPI only five years in. But LPs haven’t yet received their full principal back in cash. If the remaining $120M of marks hold and exit cleanly, DPI will eventually reach 2.0x. If markets turn and those marks are written down, TVPI will fall and DPI may never catch up, illustrating why LPs watch both metrics closely.