Founder of Angel Squad | I teach professionals how to invest in startups with help from seasoned VC investors | Investor & Advisor
TVPI vs DPI Total Value to Paid-In (TVPI) is a return metric that shows unrealized returns - both investor distributions and unrealized mark-ups - relative to the total capital put to work (either invested of you’re an angel investor, or capital called if you’re a fund). Formula: TVPI = current portfolio value/paid-in capital A TVPI greater than 1.0 means the investment has grown in value, while a TVPI less than 1.0 means the investment has shrunk. TVPI is a simple reporting metric for funds, but does not consider the time value of money and can be misleading given the ratio of portfolio company markups to actual cash distributions Distributions to Paid-In (DPI) is similar to TVPI but only solely focuses on the realized returns aspect. Formula: Distributions/paid-in capital A DPI greater than 1.0 means that an investor has received their original investment back at least. A DPI of less than 1.0 means that an investor has not yet received 100% of their principal back. When it comes to cash distributions, DPI provides a more meaningful measure of how much investors are seeing back to them. This can particularly be important in hype markets when there are big TVPI markups but not DPI.
How do we measure TVPI as individual angels with minimal access to the financials?
Thanks, Brian! That makes a lot of sense about TVPI and DPI and their value (and shortfalls) as metrics.
Android/Flutter developer || Leetcode- 1648 || Social media & Marketing Director at ACES || Senior at Nirma University
1moWhile TVPI is a simple reporting metric, it can be misleading due to the ratio of portfolio company markups to actual cash distributions. In contrast, DPI focuses solely on realized returns, providing a clearer measure of actual investor gains, especially in hype markets with inflated TVPI markups.