DPI, TVPI and IRR: how VC fund returns are measured in India

A venture fund is run by a general partner (GP), the firm that picks startups, with money from LPs such as family offices, institutions and wealthy individuals. Every few months the GP reports to LPs how the fund is doing, and three numbers appear again and again.

DPI stands for distributions to paid-in capital. It is the cash returned to LPs divided by the money they have put in so far. TVPI is total value to paid-in capital, which adds the paper value of the fund's remaining holdings to the cash already returned. IRR, the internal rate of return, is a yearly percentage that reflects both how much was made and how fast.

The maths is simple once the terms are clear. Paid-in capital is the money LPs have actually transferred to the fund so far, not the total they promised. Residual value is the fund's own estimate of what its unsold holdings are worth, often called net asset value or NAV.

RVPI, residual value to paid-in capital, divides that NAV by the paid-in capital. TVPI is DPI plus RVPI. IRR is found by taking every cash flow in and out of the fund, with its date, and solving for the single yearly rate that makes them balance.

• DPI = cash returned to LPs divided by paid-in capital.
• RVPI = NAV of remaining holdings divided by paid-in capital.
• TVPI = DPI + RVPI, so it counts both cash and paper value.
• IRR = the yearly rate implied by the dated cash flows plus the current NAV.
• Net figures are after fees and carry; gross figures are before them.

The key split is between money in the bank and money on paper. DPI is realised: the cash has reached the LPs. RVPI is unrealised: the fund believes its stakes are worth that much, but nobody has paid it yet. TVPI blends the two, so a high TVPI with a low DPI means most of the claimed gain is still unsold.

This matters because the paper value is the GP's own estimate. It is often based on the price of the last funding round of each startup. If a startup's later round is lower, or it fails, the paper value falls. Cash received does not change.

Indian venture funds raised and invested a lot between 2020 and 2022, at a time when valuations rose fast. Many of those startups have not yet listed or been acquired, and exits have been slower than the paper gains suggested. Industry reports have noted that cash returned by Indian funds has trailed that of North American and European funds over several fund vintages.

As a result, LPs have started to treat DPI as the number that counts, sometimes calling it the new IRR. A fund that shows 2.5x TVPI and 0.1x DPI may look strong on paper but has returned little cash. LPs look at DPI when deciding whether to commit to the manager's next fund.

There is no legal formula for these terms. They follow common industry practice, for example the reporting standards used by international LP bodies. In India, venture funds are registered as alternative investment funds under SEBI's AIF Regulations, 2012, and SEBI has asked AIFs to report performance against benchmarks through approved benchmarking agencies. As of November 2026, the exact format is set by SEBI circulars, which change, so check the latest ones.

Because the NAV used for RVPI and TVPI is a valuation, SEBI's rules on how AIFs value their holdings and report to investors are relevant. A GP's TVPI is only as reliable as its valuation method.

There is no single good figure, and a number taken alone says little. Three things change how to read it: the age of the fund, the stage it invests in and whether the figure is net or gross.

A young fund will have a low DPI because it has not yet sold anything, and a high IRR in the early years can come from a quick markup. Many funds show a flat or negative IRR in their first years, which is sometimes called the J-curve. A fund near the end of its life should have a DPI near or above 1x, which means LPs have got back what they put in. LPs compare a fund with others of the same vintage year and strategy, not with funds of different ages.

Each number leaves something out. DPI ignores the value still held, so a young fund looks weak even when its holdings are strong. TVPI relies on the manager's own valuations, which can lag reality. IRR rewards early returns, so a quick small sale can lift it more than a slow large one, and it can be shaped by when the fund calls money from LPs.

For that reason LPs look at all three together, and at the multiple on invested capital of each startup, the share of value that comes from one or two companies and the fund's age. A single headline number, taken alone, is rarely enough to judge a manager.

In the first years a fund spends money on fees and early investments, so DPI is near zero and TVPI may sit below 1x. Around years four to seven, markups from later rounds can lift TVPI. DPI only starts to rise when startups are sold or listed and the manager sends cash back.

By the final years, the gap between TVPI and DPI should close, because the remaining holdings are either sold or written down to a realistic value. A fund that still shows a large gap late in its life is worth questioning, since it means a lot of value is still unproven.

A fund announcing a returned x times its capital usually means DPI, which is cash. A fund announcing a gross multiple or a markup is closer to TVPI and says little about cash. News that a fund distributed money to its LPs after an exit raises its DPI.

Be careful with an IRR quoted without the time period or whether it is net or gross, and with a multiple quoted without saying whether it is realised. This is general information, not investment advice.