Metrics & Performance
Unrealized Gains
Last updated
Quick Answer
Unrealized gains represent the increase in value of portfolio investments that remain held by the fund.
What it is
Unrealized gains represent the increase in value of portfolio investments that remain held by the fund. These gains are reflected in fund valuations and TVPI calculations but haven't been converted to actual cash distributions. The gap between unrealized and realized gains is a critical risk factor in fund performance assessment.
In Practice
A fund invested $5M in a startup now valued at $50M based on its latest round. The $45M unrealized gain contributes to the fund's TVPI but could evaporate if the company's value declines before exit.
Operational context
What good looks like
The term is tied to a real workflow, not just a definition.
Ownership, timing, and evidence are clear.
The reader can tell what decision the concept supports.
Related terms point to the next useful explanation.
Why It Matters
Unrealized gains can be misleading — they depend on interim valuations that may not hold. Experienced LPs discount unrealized gains significantly when evaluating fund performance.
VC Beast Take
Unrealized gains create a dangerous illusion of success in venture capital. Paper markups can evaporate overnight when market conditions shift or follow-on rounds price companies down. The best GPs maintain conservative marking practices and focus on building companies that can deliver actual cash returns, not just impressive quarterly reports to LPs.
Related tools and reading
Term Family
Related concepts
Further Reading
Venture Capital KPIs: 20 Metrics Every GP Should Track
Most GPs are flying blind. Here are the 20 VC KPIs that separate disciplined fund managers from everyone else — with benchmarks, formulas, and why each one matters.
How Venture Capital Fund Economics Work: A Complete Breakdown
Management fees, carried interest, GP commit, J-curve, waterfalls. The actual math behind running a venture fund, explained with real numbers on a $100M fund.
VC Fund Performance Benchmarks: What Good Looks Like by Stage and Vintage
TVPI, DPI, IRR — fund performance metrics sound like alphabet soup. Here's what they mean, what good looks like, and why vintage year changes everything.
Gross IRR vs Net IRR: What LPs and GPs Need to Know
Gross IRR and net IRR can differ by 600–1,000bps in venture capital. Here's what LPs and GPs need to know about the difference — and how to avoid being misled.
100+ Venture Capital Acronyms Every Investor and Founder Should Know
From ARR to ZBB, the complete dictionary of VC and startup acronyms with plain-English definitions. Bookmark this — you'll reference it constantly.
The Math Behind VC Returns: From Entry to Exit
From entry valuation to exit proceeds, this breakdown covers the full math behind VC returns — including dilution, MOIC, IRR, carry, and the metrics LPs actually use to evaluate fund performance.
Related Guides
The Quarterly Report Template: What LPs Actually Want to See
A practical template for venture fund quarterly reports — with the exact sections, metrics, and format that institutional LPs expect.
How Venture Capital Works: The Complete Guide
Everything you need to understand about venture capital — how funds raise money, how deals get done, and how returns flow back to investors. The definitive primer.
Comparisons
Related Questions
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.
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.
Frequently Asked Questions
What is Unrealized Gains in venture capital?
Unrealized gains represent the increase in value of portfolio investments that remain held by the fund. These gains are reflected in fund valuations and TVPI calculations but haven't been converted to actual cash distributions.
Why is Unrealized Gains important for startups?
Understanding Unrealized Gains is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Unrealized Gains fall under in VC?
Unrealized Gains falls under the metrics category in venture capital. This area covers concepts related to the quantitative measures used to evaluate fund and company performance.
Newsletter
The VC Beast Brief
Fund operations, one problem a week — plus benchmarks from 75,000+ SEC filings. Every Tuesday.
The VC Beast Brief
The weekly brief for emerging managers and founders
Weekly intelligence on fundraising, VC strategy, and the signals that matter. Every Tuesday, free.
Related Tools
Archstone
Run your fund like an institution.