Before choosing between two term sheets, you ask each partner how the firm's earlier funds have performed. The first partner mentions the last fund is "marking at three times," and you can then ask how much of that value has reached investors.

One fund metric measures the distance between a paper mark and cash in hand, and most founders never learn to read it. This guide covers how to calculate DPI, what counts as a good number at each fund age and how to read an investor's DPI before you sign.

What is DPI in Venture Capital

Distributions to paid-in capital (DPI) is the cash a venture fund has returned to its investors divided by the capital those investors paid in through capital calls. Those investors are the fund's limited partners (LPs), and the firm running the fund is the general partner (GP).

The result reads as a multiple, so a DPI of 1.0x means the LPs got their money back, and anything above that is realized profit. You'll also hear the same figure called the realization multiple, because it counts only gains a fund has converted into cash.

DPI counts money that has already left the fund, so the GP cannot mark it up. Other common fund multiples incorporate an estimate of what unsold companies are worth, and those estimates can move with the market while cash in an LP's account does not. That difference is why LPs judge a fund on what it has paid out and treat any interim valuation as an in-progress estimate.

How to Calculate DPI

Calculating DPI requires one division, but accurate comparisons between funds depend on consistent definitions for distributions, paid-in capital, fees and carried interest. The formula, the gross versus net split and the gap between paid-in and committed capital all change what the multiple means.

DPI Formula

The DPI formula is cumulative distributions ÷ paid-in capital, and what goes into each side is where funds diverge. Cumulative distributions are every dollar the fund has handed back to LPs since day one. Paid-in capital is the total the LPs have contributed in response to capital calls. The output is a multiple, and a fund posts 0.4x or 1.8x, never 40 percent.

Gross and Net DPI

LPs care about net DPI, and it is the reporting standard. Gross DPI measures distributions before management fees and carried interest come out, a version that flatters the fund and tells an outsider little. Net DPI takes out those fees and the GP's share of profits first, and anything above 1.0x means the LPs came out ahead after paying everyone. Public pension plans report net figures, and a partner quoting DPI may be quoting either version.

Paid-In and Committed Capital

DPI divides by paid-in capital, and that choice explains the strange multiples young funds post. Committed capital is what an LP promised at the fund's close. Paid-in capital, which GPs call called capital, is the portion the GP has drawn down over several years. A fund in year two might have called a fifth of its commitments, so any distribution runs against a small base and one early exit swings the multiple hard.

Worked Example

A $100 million fund has called every dollar of its commitments and distributed $65 million to its LPs. Those LPs have 65 cents back for every dollar they put in, a DPI of 0.65x. Whatever residual value the GP still reports comes from companies the fund has not sold, and a down round or a write-off can move that figure in either direction. How much weight the same multiple deserves depends on whether the fund is in its fourth year or its twelfth.

What Counts as a Good DPI by Fund Age

Fund age drives almost everything about a good DPI, and the same number can be excellent or alarming. Venture funds follow a J curve, and distributions arrive late in it. Reference points by fund age give a partner's numbers the context a raw multiple lacks:

• Years one to five: Near zero is normal. Young venture funds commonly reach this point before meaningful distributions begin, and the absence of DPI by year three says little by itself.
• Years six to nine: Medians fall well below 1.0x in this window. Across the 2017 and 2018 vintages, fewer than 20 percent of funds have reached 1.0x DPI.
• Years 10 and beyond: A fund still short of returning its LPs' capital at this age has little time left in its term to close the gap. Distributions this late come from whatever companies remain unsold, and that pool shrinks each year.
• Vintage over absolute number: A 2021 fund and a 2016 fund at the same DPI tell opposite stories. The 2021 vintage averages 0.05x at year five, the lowest five-year multiple of any vintage this century, and only a fund twice as old should worry at that level.
• Stage effects: Seed funds take longer to distribute than growth funds, because they buy in years before any exit is on the table.

Each of these reference points depends on the fund's vintage year and the stage it invests at. Without both of those alongside the multiple, a DPI figure on its own tells you almost nothing.

DPI vs. TVPI, IRR and MOIC

Total value to paid-in capital (TVPI) equals DPI plus residual value to paid-in capital (RVPI), and DPI can never exceed TVPI. RVPI is the GP's own estimate of the unsold companies divided by paid-in capital, and the gap between TVPI and DPI is value nobody has cashed yet. A fund can post 2.5x TVPI against zero DPI and tell the truth, since every dollar of that 2.5x value is a mark the GP wrote down.

Internal rate of return (IRR) prices the timing of cash more than its size, and one fast early exit can flatter it for the life of the fund. More than half of reported IRR across 6,945 private funds traced back to cash flow timing rather than to the size of the gains. Multiple on invested capital (MOIC) uses the same total value math as TVPI, but firms commonly quote it as gross deal MOIC, before fund-level fees and carry. A 10x MOIC on one company says nothing about what LPs kept across the fund.

Where DPI Can Mislead You

A reported DPI can rise without a single company changing hands. Borrowed cash and sale proceeds arrive in an LP's account in identical form, and the mechanisms that produce them differ sharply:

• Distributions funded by net asset value (NAV) loans: A NAV loan is debt a lender secures against the fund's holdings, and a GP can use the proceeds to pay LPs. The multiple then rises on borrowed money that brings NAV loan risk with it, and exit proceeds may repay the lender before LPs see more.
• Continuation vehicles and GP-led secondaries: A continuation vehicle is a new fund the same GP sets up to buy an asset out of an older fund. Selling LPs see real DPI at a price the same GP set, and the asset often leaves at a conservative valuation that lifts the gain booked in the new vehicle.
• Recycled and recallable capital: Recycling lets a GP reinvest early exit proceeds instead of distributing them, and the reported DPI comes out lower as a result. A recallable distribution can come back on demand, and under the standard convention recallable distributions count in the numerator with recalled amounts added back to paid-in capital.
• An early partial exit: One small acquisition in year three, measured against a fraction of committed capital, can print a multiple that looks like a mature fund's. Most of the fund's capital remains in companies nobody has sold.

Founders comparing two funds need to know where the cash came from and whether the distribution is recallable.

How to Read an Investor's DPI Before You Sign a Term Sheet

Your next five years depend more on the fund behind the partner than on the pitch, and DPI is the fastest route into that fund's situation. A firm with cash returned and years left on its clock may behave differently in a Series B negotiation than one that needs your exit to raise its next fund.

Fund Vintage and Remaining Life

Where a fund sits in its term should line up with your timeline to an outcome, and it often doesn't. A seed check from an older fund may put your company late in that fund's life. If your path to a large exit extends beyond its remaining term, even with extensions, that timing can limit how patient the fund can afford to be.

Follow-On Capacity

Pro-rata rights give an investor the option to invest in your later rounds, and only unspent reserves make that option real. CRV led DoorDash's first financing round and backed the company again during its Series A and B. Mercury shows the same pattern: CRV led Mercury's Series A and participated in its Series B, C and D.

Signs of Exit Pressure

Funds late in their life without distributions face more exit pressure. That pressure raises the odds of an acquisition or a liquidation, but leaves the odds of a public offering unchanged. At your board table it shows up as pressure to take an acquisition offer you would otherwise pass on. A partner whose fund has returned cash may have less reason to push.

Questions Worth Asking in Diligence

Any partner who reports DPI honestly can discuss the vintage year and extension status on the spot, and the answers belong with the other questions you ask investors. The partner should also explain the source of the reported DPI: cash exits to third parties, NAV loan distributions or sales into a continuation vehicle the same firm controls.

What the Shift From TVPI to DPI Means for Founders

LPs now gate new commitments on cash returned instead of paper marks, and that shift reaches the board table. GPs under the new constraint handle their unsold companies with distributions in mind. When re-ups slow, the companies closest to an exit absorb the most pressure, whether or not selling is right for those founders. A fund that has already sent cash back to its LPs can afford more patience about when to sell.

For a founder choosing between two term sheets, the fund's cash returns and remaining life belong on the comparison sheet next to valuation. That patience is part of what a founder is buying. We returned $275 million in uninvested capital to our LPs rather than deploy it at late stage valuations that had run too high relative to the likely payoff. If you're an early stage founder looking for a partner whose fund can wait for the right outcome, reach out to us to see if we'd be a good fit.

Frequently Asked Questions About DPI in Venture Capital

Where can founders find a fund's DPI

Public pension funds that back venture firms publish fund-level performance. Their tables list vintage year, cash in, cash out, net IRR and total value multiple. The data runs about two quarters behind, excludes exited funds and marks vintages from 2021 onward as not meaningful. For funds without a public LP, the partner can provide the same quarterly reporting institutional investors receive.

Is DPI the same as the realization multiple

Yes, the two names describe one calculation. Realization multiple stresses what the figure measures, the share of fund value turned into cash for LPs, while DPI names the two inputs. Either way, unsold holdings stay out of it, which is what separates it from TVPI.

Do secondary sales count toward a fund's DPI

It depends on who is selling. When the fund itself sells shares in a company to a third-party buyer, the cash flows into the fund and out to LPs, so it counts. An LP selling its own stake in the fund to another investor moves money between those two parties, and the fund's DPI doesn't change. Sales into a GP-led continuation vehicle generate DPI for the LPs who cash out, though the same firm set the price and still controls the asset.

How does DPI affect a fund's ability to raise its next fund

DPI can affect fundraising because returned cash gives LPs capacity for new commitments. Lagging distributions tighten that capacity, and newer managers generally have less cushion.