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Decoding VC fund performance: DPI, TVPI, IRR
Let’s land you that dream VC role! 🪄
Nicole DeTommaso
July 06, 2025
Hi! I’m glad you’re here. You’ve made it to issue #63 of VC Demystified🪄.
My name’s Nicole - I’m a Principal at an early stage venture fund, and I know firsthand that VC can often be a black box. Breaking into the industry may feel daunting and resources can seem scarce and inaccessible. I wanted to put together a newsletter to give others the playbook I wish I had when I first started.
Today’s deep dive: A simple guide to the metrics General Partners track to measure VC fund performance
My personal mission is to open as many doors as possible for other people and this newsletter is just one avenue to do that. As always, I will continue to post VC insights daily for free across my socials.
VC Job Openings Preview (3 of 10)🪄
B Capital is hiring a Head of Investor Relations & Communication.
Location: LA, NYC, SF
https://b.capital/about/careers/?gh_jid=6628334003&gh_src=05h4p5fc3us#job_opening
Flybridge is hiring a Chief of Staff.
Location: NYC
https://www.linkedin.com/jobs/view/4249875666
Figma Ventures is hiring for Corporate Development & Strategy.
Location: SF, NYC
https://job-boards.greenhouse.io/figma/jobs/5492533004?
Read time: 5 minutes
A simple guide to the metrics General Partners track to measure VC fund performance
Everyone wants to work in VC but few understand how VCs themselves measure the success of their funds.
If you want to stand out in interviews, or if you’re a founder trying to understand your investors better, knowing how fund performance is evaluated will give you an edge.
Here’s a clear breakdown:
1) DPI (Distributions to Paid-In Capital)
What it is: Measures how much cash or stock a fund has returned to Limited Partners (LPs) divided by the total capital LPs have put into the fund to date.
Why it matters: This shows realized returns. Many funds look great on paper (high TVPI) but haven’t returned any cash yet. LPs care deeply about DPI because it’s what actually hits their accounts.
Example:
If a $100M fund has returned $50M to LPs so far, DPI = 0.50x.
2) TVPI (Total Value to Paid-In Capital)
What it is: Measures the total value (money paid back to LPs already + unrealized portfolio value) divided by the total capital LPs have put into the fund to date.
Why it matters: This shows paper returns plus realized returns (cash paid back to LPs already), giving a snapshot of how a fund is performing today. It’s commonly used to track performance before a fund is fully returned (i.e. before startups have officially exited via M&A or IPO).
Example:
