DPI, RVPI and TVPI
Cash returned, value still held, and the two together. Why LPs read the split, not just the total.
- Calculate DPI, RVPI and TVPI from paid-in capital, distributions and NAV
- Say how much more a fund must distribute to return capital
- Back out the NAV from a reported TVPI and DPI
- Show what a markdown does to TVPI
The intuition
You lent a friend $1,000. They have paid you back $600 in cash, and they say the car they bought with the rest is worth $1,200, which they will sell and share with you. Money in your pocket: $600. Money you are promised: $1,200. Total: $1,800. You would trust the first number more than the second.
LPs score a fund with three multiples of what they have paid in. DPI is cash already returned. RVPI is the GP's valuation of what the fund still holds. TVPI adds them. Early in a fund TVPI is nearly all valuation; by the end it is all cash.
DPI = distributions ÷ paid-in. RVPI = NAV ÷ paid-in. TVPI = DPI + RVPI. DPI is a fact; RVPI is an estimate.
Why it works
- The conventions here: paid-in capital is what LPs have actually contributed, fees included. All three multiples are on paid-in capital, not on commitments.
- DPI (distributions to paid-in) is realized: cash that has come back and cannot be taken away.
- RVPI (residual value to paid-in) is unrealised: the net asset value (NAV) of the portfolio, set by the GP under its valuation policy and audited, but still an opinion until the companies are sold.
- TVPI (total value to paid-in) is the headline. Two funds with the same TVPI can be very different if one is mostly DPI and the other mostly RVPI.
- DPI of 1.0x is the milestone LPs watch: the point at which the fund has stopped costing them money. Under a whole-fund waterfall no carry can be paid before it.
- Age matters. A 0.4x DPI is normal for a three-year-old fund and a warning sign for a nine-year-old one.
| DPI: 300 ÷ 500 | 0.60x |
| RVPI: 600 ÷ 500 | 1.20x |
| TVPI: 0.60 + 1.20 | 1.80x |
| Still to distribute to return capital: 500 − 300 | 200 |
| After the markdown: 0.60 + 1.20 × 80% | 1.56x TVPI, down 0.24 |
Only a third of the 1.80x is cash in hand, so the markdown hits most of the value.
The formulas
Cash back per dollar paid in.
Value still held per dollar paid in.
Everything, realized or not.
Run TVPI backwards.
Only the unrealised part moves.
Worked example
Work out paid-in capital first, then divide distributions and NAV by it.
See it move
Same fund. Change how much has been called, what has been distributed, what the portfolio is worth and the size of a markdown.
- Raise distributions. DPI and TVPI rise; RVPI does not move.
- Raise the capital called. Every dollar bar grows, but none of the three multiples moves: each is per dollar paid in.
- Raise the markdown. TVPI after it falls, while DPI stays exactly where it was.
- Raise the NAV. The same markdown now costs more TVPI, because more of the value is unrealised.
Run it backwards
Reversed: a fund reports TVPI and DPI. What is its portfolio worth?
TVPI − DPI is RVPI, the value still held per dollar paid in. Multiply by paid-in capital to get the NAV in dollars.
LPs do this constantly: fund reports lead with the multiples, and the NAV behind them tells you how much of the headline is still a promise.
Traps
Say it in the interview
“What's the difference between DPI and TVPI, and which do LPs care about more?”
Check yourself
4 fresh questions, with new numbers. Answer each one correctly to finish the chapter. Get one wrong and you will see the full working, then you can try it again with new numbers.
Answers within 1% are marked right. Type the number; $, %, x and M are fine. First tries count toward Learned: the topic is Learned once every chapter is done and 75% of first tries were right.
- DPI = distributions ÷ paid-in; RVPI = NAV ÷ paid-in.
- TVPI = DPI + RVPI.
- NAV = (TVPI − DPI) × paid-in.
- Markdowns hit only RVPI; DPI is cash.