Fund Structure
Last updated
Quick Answer
The current estimated value of portfolio investments that have not yet been exited — also called paper gains or unrealized gains.
Unrealized value (or RVPI — Residual Value to Paid-In) represents what a fund's remaining portfolio is worth based on current marks, without any cash having been returned to LPs. It's the 'paper' portion of total fund value (TVPI).
Unrealized value is inherently uncertain — marks are based on most recent rounds or comparable company analysis, not actual transaction prices. During bull markets, unrealized values can be dramatically overstated; corrections reveal the gap between mark and reality.
In Practice
A fund shows TVPI of 3x, but DPI (actual cash distributed) is only 0.5x. The remaining 2.5x is unrealized — it looks great on paper but hasn't been converted to actual LP returns. If the market turns, that 2.5x could become 1x quickly.
What good looks like
Why It Matters
Sophisticated LPs always ask for DPI alongside TVPI. A fund with high TVPI and low DPI is essentially unproven — the gains exist only in spreadsheets. The 2022 correction destroyed enormous amounts of unrealized value that was being counted as real.
VC Beast Take
The gap between unrealized and realized value is where many VC careers are made or broken. Funds that consistently convert paper gains into actual cash distributions build lasting reputations, while those with high unrealized values but poor exit execution struggle to raise subsequent funds. Smart LPs increasingly focus on DPI over TVPI for this reason.
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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.
Unrealized value (or RVPI — Residual Value to Paid-In) represents what a fund's remaining portfolio is worth based on current marks, without any cash having been returned to LPs. It's the 'paper' portion of total fund value (TVPI).
Understanding Unrealized Value is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Unrealized Value falls under the fund-structure category in venture capital. This area covers concepts related to how venture capital funds are organized, managed, and governed.
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