A Guide to Understanding DPI, RVPI and TVPI
Understand how these metrics give investors and managers a clear picture of fund value and progress.
Table of Contents
Evaluating a fund’s performance goes beyond headline returns. Investors and managers rely on specific metrics to gauge both realized gains and future potential. Among the most important are DPI, RVPI and TVPI, the three ratios that together paint a complete picture of a fund’s health.
What Do DPI, RVPI and TVPI in Funds Mean?
Private equity (PE) and venture capital (VC) investors, particularly Limited Partners (LPs) and General Partners (GPs), use fund performance metrics to track how capital is performing through different stages of a fund’s life.
Among these, three ratios stand out as industry standards: Distributed to Paid-In Capital (DPI), Residual Value to Paid-In Capital (RVPI), and Total Value to Paid-In Capital (TVPI).
What is Distributed to Paid-In Capital (DPI)?
DPI tells investors how much cash has already been returned compared to how much they originally invested. Think of it as money back in your pocket. A DPI of 1.0x means the fund has returned every dollar invested; a DPI above 1.0x means investors have made a profit, often referred to as the “Cash-on-Cash Return” multiple.
It increases as the fund exits investments and distributes cash to investors. Because DPI only measures realized returns, it’s the clearest sign of a fund’s liquidity and success so far. DPI in particular is increasingly viewed as a reliable alternative to IRR, highlighting its role in measuring real cash performance over time.
What is Residual Value to Paid-In Capital (RVPI)?
RVPI measures the value of what remains in the fund; it is the unrealized portion.
It shows how much investor capital is still held in portfolio companies that haven’t been sold yet.
A higher RVPI means there’s still potential future upside, but it can fluctuate as valuations change. Investors and fund managers use RVPI to track what’s “on paper” versus what has already been realized.
What is Total Value to Paid-In Capital (TVPI)?
TVPI combines DPI and RVPI to display the fund’s total performance, including both realized and unrealized returns.
It’s calculated by adding DPI and RVPI or by dividing the sum of distributions and residual value by paid-in capital. A TVPI of 1.0x means the fund has just broken even; anything higher shows value creation for investors.
How Investors and Fund Managers Use These Metrics
Investors (LPs) use DPI, RVPI, and TVPI to understand how their capital is performing, including how much has been returned, what remains invested, and the fund’s total value.
Fund managers (GPs) track these ratios to measure progress, communicate performance, and build trust with investors. Together, the three metrics give a complete picture of a fund’s journey, from invested capital to realized returns.
Frequently Asked Questions:
Why do DPI, RVPI, and TVPI matter to investors?
These metrics help investors understand both realized and potential returns. DPI shows the actual cash they’ve received, RVPI shows the remaining value in the portfolio, and TVPI combines both to give a complete view of total performance and fund health.
How often are DPI, RVPI, and TVPI updated?
Fund managers typically update these ratios quarterly or semi-annually, depending on reporting cycles. They change over time as investments are revalued, exits happen, or distributions are made to investors.
What’s the difference between TVPI and IRR?
TVPI measures total value as a multiple of invested capital, showing how much value the fund has created. IRR (Internal Rate of Return) measures how fast that value was generated over time. TVPI focuses on the magnitude of return; IRR focuses on the speed of return.
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