DPI, TVPI, and IRR are the three standard metrics used to report a private fund’s performance: DPI measures cash actually distributed back to investors, TVPI measures total value including holdings not yet sold, and IRR annualizes the return to account for when the cash moved.
In plain terms
A public stock has one number that matters: the price. A private fund has three, because most of what it owns can’t be priced by a market and most of what it owes investors hasn’t been paid out yet. DPI tells you how much real cash has come back. TVPI tells you what the fund claims the whole position — cash plus unsold holdings — is worth. IRR tells you how good that return looks once the clock is factored in, because a double in two years and a double in ten years are not the same result.
How it works
DPI (Distributions to Paid-In capital) divides the cash a fund has actually distributed to its limited partners by the cash those partners have paid in. A DPI of 1.0x means investors have gotten their money back; anything above that is realized profit. It is the hardest number to fake, because it is the only one of the three built entirely from cash that has actually changed hands.
TVPI (Total Value to Paid-In capital) adds the fund’s residual value — its unsold holdings, marked by the general partner — to distributions already paid, then divides by paid-in capital. TVPI is always equal to or higher than DPI, and the gap between them is the fund’s RVPI (Residual Value to Paid-In), the part of the headline number that is still a general partner’s estimate rather than cash in hand.
IRR (Internal Rate of Return) is the annualized rate that, applied to every cash flow in and out of the fund on the date it happened, makes the fund’s net present value equal zero. Unlike DPI and TVPI, IRR is time-weighted: a fund that returns 2x in three years posts a far higher IRR than one that returns 2x in nine, a distinction the multiples alone can’t show. The Institutional Limited Partners Association, whose standards most large allocators require of general partners, has historically let firms report IRR gross or net of fees and with or without a subscription credit line’s effect — choices that can move the headline number by several points without the underlying investments changing at all.
The numbers
- DPI of 1.0x: investors have recouped their full invested capital in cash.
- TVPI − DPI = RVPI: the unrealized portion of a fund’s reported multiple, valued by the GP rather than the market.
- Reporting standardization: ILPA’s new Performance Template, released industry-wide in January 2025, requires funds to report gross and net IRR separately, both with and without the effect of a subscription line of credit, for funds in their investment period as of Q1 2026 or formed on or after January 1, 2026.
- Typical early-life IRR: commonly negative in a fund’s first 2–4 years, the J-curve effect, before rising as holdings mature and distributions begin.
What people get wrong
That a strong TVPI means a strong fund. TVPI includes everything still unsold, valued by the same manager being evaluated, and in a fund’s early years that unrealized portion can be the overwhelming majority of the number — a young fund can show an eye-catching TVPI built almost entirely on markups nobody has cashed out. DPI resists that spin, since it only counts money LPs have actually received, which is why sophisticated allocators weight it more heavily than TVPI once a fund matures, and why a manager eager to raise a new vehicle has every incentive to lead with TVPI instead.
Related
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See also: J-curve · Vintage year · Capital call