Pinion Blog
DPI vs. TVPI: Paper Gains and Real Money
TVPI tells you what the investment is worth on paper. DPI tells you what's actually been returned. Understanding what each metric measures—and what the gap between them implies—is one of the more practical skills in evaluating private investment performance.
If you've spent any time looking at fund performance reports, you've seen TVPI and DPI quoted side by side. They're often shown as a pair — TVPI 2.1x, DPI 0.4x — and the pairing isn't accidental. The two metrics measure related things, but the gap between them is where the actually-useful information lives. Understanding what each one tells you, and what their relationship implies, is one of the more practical skills in evaluating private investment performance.
This is a short companion piece to the earlier MOIC vs. TVPI article. Here we focus specifically on DPI and how it sits alongside TVPI.
What each metric measures
TVPI is Total Value to Paid-In capital. It captures every dollar the investment is worth, whether that value has been realized in cash or still sits on the books as an unrealized mark.
TVPI = (Distributions + Net Asset Value) ÷ Paid-In Capital
DPI is Distributions to Paid-In capital. It captures only the cash that's actually been returned. Unrealized gains don't count.
DPI = Distributions ÷ Paid-In Capital
The relationship between them is straightforward. TVPI = DPI + RVPI, where RVPI is Residual Value to Paid-In (the unrealized portion). DPI is the realized component of TVPI. Subtract one from the other and you get what's still in the ground.
The core distinction
TVPI tells you what the investment is worth on paper. DPI tells you what's actually been returned. That distinction sounds small, but it changes the meaning of the number entirely.
A fund showing 2.5x TVPI looks impressive. If that same fund shows 0.2x DPI, the headline number is mostly paper. The fund has marked its positions up to a level that implies a strong outcome, but very little cash has actually come back to the LPs. Whether the markup holds through to realization is a separate, much harder question.
A fund showing 2.5x TVPI with 2.3x DPI is telling you something completely different. The gain is essentially realized. The cash has come back. What's left on the books is a small residual that, even if it goes to zero, won't materially change the answer.
Same TVPI, very different outcomes. The DPI is the disambiguator.
How to read them together
A few patterns worth recognizing:
High TVPI, low DPI. Common in mid-life funds, especially in venture, where the bulk of the value sits in unrealized positions that haven't exited yet. Not inherently a problem — it's the normal shape of a fund a few years into its life. The question is whether the markups are conservative or aggressive, and whether the underlying companies have a realistic path to actual exits.
High TVPI, high DPI. This is the strongest signal. The fund has marked up and returned capital. The unrealized residual is gravy, not the whole story. Late-life funds and successful early-stage vintages tend to land here.
Low TVPI, low DPI. The fund hasn't worked. Not much to mark up, not much to distribute. The earlier in the fund's life you see this, the more time there is for things to turn around, but the longer the pattern persists, the less likely it is to resolve favorably.
Low TVPI, high DPI. Less common but interesting. The fund has returned most of its capital and is winding down with little residual value. The multiple may not be exciting, but the cash has come back, which means the IRR is often stronger than the multiple suggests because the distributions came early.
Why DPI is the honest one
There's a saying in the institutional LP world that TVPI is a story and DPI is a fact. The point is that TVPI relies on the GP's marks — judgments about what unrealized positions are worth — and those marks can be aggressive, conservative, or anywhere in between. Two GPs holding identical portfolios could report different TVPIs depending on their markup philosophy. DPI doesn't have that flexibility. The cash either came back or it didn't.
This is why sophisticated LPs lean heavily on DPI when evaluating a manager's track record, especially for mature funds. The TVPI of a five-year-old fund is partly a forecast. The DPI of a five-year-old fund is partly an answer. Combine them and you get a more complete picture than either alone, but the DPI is the harder, more durable number.
What this means in practice
For most investors looking at fund holdings — including angels with fund commitments alongside their direct deals — the practical takeaway is simple: don't read TVPI without reading DPI. The two-number pair tells you whether the multiple is real, where the fund is in its lifecycle, and how much of the answer is still ahead of you.
A 2.0x TVPI is a different investment depending on whether DPI is 1.8x or 0.1x. The first is a fund that worked. The second is a fund that might work. Until distributions catch up to marks, the gap between them is the gap between a story and a fact.
Track the metrics that matter
Pinion tracks DPI, TVPI, and IRR across your fund investments alongside your direct deals — so you always know what's realized, what's on paper, and where you actually stand. Try Pinion →