Total value to paid-in
A fund's total value, realised and unrealised, divided by capital LPs have paid in.
It is DPI plus RVPI. It shows how much value a fund has created so far but includes valuations that may not yet be realised.
TVPI equals DPI plus RVPI. Early in a fund's life it is driven mostly by valuations, and as the fund matures more of it should turn into DPI through actual distributions.
LPs benchmark TVPI against funds of the same vintage and strategy, usually by quartile. A top quartile TVPI that is mostly unrealised gets less credit than a slightly lower TVPI backed by cash already returned.
Worked example
LPs have paid in $40M. The fund has distributed $20M and its remaining portfolio is valued at $44M. TVPI is ($20M plus $44M) divided by $40M, which is 1.6x. Of that, DPI is 0.5x and RVPI is 1.1x.
Common questions about TVPI
What is a good TVPI?
It depends on vintage and fund age. Many LPs see a net TVPI of 2x or more at the end of a venture fund's life as solid and 3x or more as excellent, but early in a fund's life the comparison should be against peers of the same age.
Is TVPI net or gross?
Reported to LPs it is normally net of management fees, expenses and carried interest. Always state which you are showing.