IRR, TVPI and DPI, side by side
Three numbers, three questions — and why none of them is enough alone.
What is the difference between IRR, TVPI and DPI?
IRR measures annualised return accounting for timing; TVPI measures total value (distributed plus remaining) per dollar paid in; DPI measures only cash actually returned per dollar paid in. IRR answers 'how fast', TVPI 'how much in total', DPI 'how much in cash'.
What each one hides
IRR can look high on a small, quick win and is flattered by subscription lines. TVPI includes unrealised value that depends on valuation judgement. DPI ignores remaining value entirely, so young funds look poor on it.
Reading them together
Early in a fund's life, TVPI and IRR carry the story; later, DPI becomes the test. A fund with high TVPI and low DPI late in life invites questions about marks and exits.
Benchmarks
Compare against funds of the same vintage and strategy, and against public markets using PME.
| Metric | Formula | Answers | Watch for |
|---|---|---|---|
| IRR | Discount rate where NPV of cash flows = 0 | How fast? | Timing tricks, subscription lines |
| TVPI | (Distributions + NAV) ÷ paid-in | How much in total? | Valuation judgement |
| DPI | Distributions ÷ paid-in | How much in cash? | Low early in fund life |
| RVPI | NAV ÷ paid-in | How much is still unrealised? | Marks |
Questions
Which metric do LPs care about most?
Increasingly DPI, especially in slower exit markets.
Related reading
Investment analytics for private funds: metrics that matter · TVPI · DPI
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