Venture Capital (VC) fund performance is evaluated using a set of metrics that measure the fund’s ability to return capital to investors—both realized (cash) and unrealized (paper value). The three most important metrics are **TVPI**, **DPI**, and **RVPI**. ## Key Metrics ### 1. TVPI – Total Value to Paid-In **Formula**: ``` (Total Value) / (Paid-In Capital) = (Residual Value + Distributions) / Paid-In Capital ``` **Description**: - TVPI measures the total value of a fund (realized + unrealized) relative to the money invested. - It includes both the cash returned to LPs and the current value of the fund’s remaining assets. - Commonly used in early and mid-fund life to track performance. **Example**: If a fund invested $100M, returned $50M in cash, and holds $150M in unrealized value: ``` TVPI = (150 + 50) / 100 = 2.0x ``` --- ### 2. DPI – Distributions to Paid-In **Formula**: ``` (Cash Returned to LPs) / (Paid-In Capital) ``` **Description**: - DPI represents how much actual money has been returned to investors. - It’s the most important metric for mature funds because it measures real outcomes. - A DPI of 1.0x means LPs have received their money back. Anything above that means profit has been realized. **Example**: If LPs have received $50M from a $100M fund: ``` DPI = 50 / 100 = 0.5x ``` --- ### 3. RVPI – Residual Value to Paid-In **Formula**: ``` (Unrealized Value) / (Paid-In Capital) ``` **Description**: - RVPI reflects the value of the remaining portfolio that hasn’t been exited. - It's a measure of paper gains or the value "still in the ground". - TVPI is the sum of DPI and RVPI. **Example**: If the fund holds $150M in remaining value: ``` RVPI = 150 / 100 = 1.5x TVPI = DPI + RVPI = 0.5 + 1.5 = 2.0x ``` --- ## Note on CVPI CVPI (Cumulative Value to Paid-In) is sometimes used as an older term or interchangeable with TVPI. In most modern reporting, CVPI is rarely used separately and can be treated as synonymous with TVPI. --- ## Benchmarks by Fund Vintage (as of 2023–2024) | Fund Vintage | Bottom 25% | Median (50%) | Top 25% | Top 10% | |--------------|-------------|---------------|----------|-----------| | 2017 | 1.29x | 1.70x | 2.34x | 3.51x | | 2018 | 1.06x | 1.36x | 1.95x | 2.69x | | 2019 | 1.01x | 1.25x | 1.58x | 2.18x | | 2020 | 0.93x | 1.08x | 1.39x | 1.90x | | 2021 | 0.87x | 0.99x | 1.11x | 1.34x | **Source**: Carta 2024 TVPI dataset, covering 2,079 US venture funds --- ## YC vs Traditional VC Funds (2018–2020 Cohorts) | Cohort | TVPI (Bottom 25%) | TVPI (Median) | TVPI (Top 10%) | |--------|--------------------|----------------|-----------------| | YC Demo Day Investors | 3.3x | 5x | 15x | | Traditional VC Funds | 0.9–1.7x | 1.0–1.4x | 2.0–3.5x | Even the worst-performing YC portfolios from this period outperform the top quartile of many traditional VC funds. --- ## Summary Takeaways - **TVPI** is useful for tracking early fund performance but is influenced by unrealized gains. - **DPI** is the gold standard for fund performance—it shows what LPs actually received. - **RVPI** gives insight into the fund’s remaining potential value. - In early years, LPs focus on TVPI and RVPI; in later years, DPI becomes the most important metric. - Benchmarks vary by vintage, but even a TVPI above 2.0x is strong; DPI above 1.0x is profitable.