VC Metrics & Performance
What is DPI in venture capital?
DPI (Distributions to Paid-In Capital) measures how much cash a VC fund has actually returned to LPs relative to how much was invested. A DPI above 1x means LPs have gotten their money back.
DPI — Distributions to Paid-In Capital — is the most important metric for measuring realized VC returns. It tells you how much actual cash has been returned to limited partners.
The formula: DPI = Total distributions to LPs / Total capital invested by LPs
A DPI of 1.0x means investors have received exactly their money back. A DPI of 2.0x means they've received twice their investment in cash. A DPI of 0.3x means only 30% of invested capital has been returned — most value is still locked in portfolio companies.
Why DPI matters: Unlike TVPI (which includes unrealized value), DPI is real money in LP's pockets. A fund can look great on paper (high TVPI) but have low DPI if it hasn't exited any companies. LPs — especially institutional LPs — care deeply about DPI because they need to show returns to their own boards and constituents.
DPI vs. TVPI: Early in a fund's life, DPI is near zero (no exits yet). TVPI includes paper gains. As the fund matures and companies exit, DPI rises and converges toward TVPI. A fund with high TVPI but low DPI is often called a 'zombie fund' — lots of paper value but no liquidity for LPs.
Top VC funds aim for a DPI of 3x or more over a 10-year fund life.
Related questions
What is IRR in venture capital?
IRR (Internal Rate of Return) is the annualized return on a VC investment, accounting for the timing of cash flows. Top-quartile VC funds target net IRRs above 20-25%.
What is TVPI and MOIC in venture capital?
TVPI (Total Value to Paid-In Capital) is the total value of a fund including unrealized gains. MOIC (Multiple on Invested Capital) is the gross investment multiple on a deal or fund.
What is the J-curve in venture capital?
The J-curve describes the typical pattern of VC fund returns: negative in early years as fees are charged and investments are made at cost, followed by rising returns as portfolio companies mature and exit.