Total Value to Paid In (TVPI)

Investment Multiple TVPI
TVPI measures the performance of a private equity fund

Total Value to Paid-In Capital (TVPI) is a crucial metric used in the world of private equity to measure the performance and success of an investment. It helps investors evaluate how much value has been generated in relation to the capital they have contributed. In this article, we will delve into what TVPI is, its significance, how it is calculated, and its comparisons with other key metrics in the private equity industry.

What is Total Value to Paid-In Capital (TVPI)?

Total Value to Paid-In Capital (TVPI) is a metric used to assess the overall performance of an investment in a private equity fund. It is calculated by dividing the total value realized from the investment by the total amount of capital that investors have contributed or paid into the fund. The resulting ratio provides insight into how efficiently the fund manager has utilized the investor’s capital to generate returns.

TVPI in Private Equity

Private equity investments involve a commitment of capital from limited partners (LPs) to a fund managed by a general partner (GP). The GP, in turn, deploys this capital to invest in various private companies or assets with the aim of achieving substantial returns over the fund’s life.

tvpi definition

What is the Difference Between Paid-In Capital vs. Committed Capital?

Before delving into TVPI, it’s essential to understand the difference between paid-in capital and committed capital. Committed capital refers to the total amount of capital that LPs pledge to contribute to the private equity fund over its life. On the other hand, paid-in capital represents the actual amount of money that LPs have contributed to the fund up to a given point in time.

What is a good TVPI?

A good TVPI is typically greater than 1.0, which indicates that the investments have generated more value than the total capital contributed. In the private equity industry, a TVPI of 1.0 means that the investments have returned exactly the amount of capital contributed, and anything above 1.0 signifies a positive return.

Why Do Investors Use TVPI?

Investors use TVPI as a crucial performance metric to assess the success of their private equity investments. It helps LPs gauge the efficiency of the fund manager’s investment decisions and the overall performance of the fund. A high TVPI indicates that the fund manager has made successful investments, while a low TVPI may signal underperformance.

Why does TVPI typically dip in initial years?

TVPI often experiences a dip in the initial years of a private equity fund’s life due to several reasons. Firstly, the invested capital takes time to mature and grow in value. Many investments in the fund’s portfolio may still be in their early stages, and their full potential returns have not been realized yet. Additionally, some investments may face temporary challenges or market fluctuations that affect their valuation. As the fund progresses and successful exits are made, the TVPI tends to improve.

Pros and Cons of TVPI


  1. Comprehensive Performance Assessment: TVPI offers a holistic view of the fund’s overall performance, considering both realized and unrealized investments.
  2. Long-term Perspective: TVPI considers the entire life of the fund, encouraging a long-term investment approach.
  3. Benchmarking: LPs can use TVPI to compare the fund’s performance against industry benchmarks and other funds.


  1. Unrealized Investments: Since TVPI includes the value of unrealized investments, it may not accurately reflect the fund’s true performance until all investments are realized.
  2. Susceptible to External Factors: Market fluctuations and economic conditions can significantly impact TVPI, leading to fluctuations in performance assessments.

Shortfalls of TVPI

While TVPI is a valuable metric, it does have some limitations that investors should be aware of:

  1. Limited in Early Stages: As mentioned earlier, TVPI may not provide a comprehensive picture in the early stages of the fund’s life when many investments are yet to mature.
  2. Ignores Time Value of Money: TVPI does not account for the time value of money and the impact of cash flows at different points in time.

TVPI Formula and Calculation

The formula for calculating TVPI is as follows:

TVPI = (Total Value of Distributions) / (Total Paid-In Capital)

The Total Value of Distributions includes all the capital returned to LPs through exits, dividends, or any other distributions. Total Paid-In Capital refers to the sum of all contributions made by LPs to the fund.

tvpi formula

How to Calculate TVPI: An Example:

Let’s consider an example to calculate TVPI:

  • Total Value of Distributions: $300 million
  • Total Paid-In Capital: $200 million

TVPI = $300 million / $200 million TVPI = 1.5

In this example, the TVPI is 1.5, indicating that for every dollar invested, the investors received $1.50 in return.

TVPI vs. MOIC (Multiple on Invested Capital):

TVPI and MOIC are both performance metrics used in private equity, but they differ in their calculations. MOIC measures the multiple of the original investment amount that has been returned to investors, while TVPI takes into account the total value realized from investments. MOIC is a cash-on-cash multiple, while TVPI includes unrealized investments in its calculation.

TVPI vs. DPI (Distributions to Paid-In Capital) and RVPI (Residual Value to Paid-In Capital):

DPI measures the cash distributions to investors as a percentage of the total paid-in capital. RVPI, on the other hand, represents the unrealized value of the remaining investments as a percentage of the total paid-in capital. While TVPI considers both realized and unrealized investments, DPI and RVPI focus on specific aspects of the fund’s performance.

Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is another essential metric in private equity that calculates the annualized rate of return on investments. Unlike TVPI, which focuses on the total value of distributions relative to capital contributed, IRR considers the timing and magnitude of cash flows to determine the fund’s performance.

IRR vs. TVPI – What are the Key Differences?

The key difference between IRR and TVPI lies in their calculation and focus. While TVPI provides a ratio of total value realized to paid-in capital, IRR calculates the rate of return on individual cash flows over time. TVPI is more suitable for evaluating the overall performance of the fund, while IRR gives insight into the fund’s internal rate of growth.

In conclusion, Total Value to Paid-In Capital (TVPI) is a critical metric in private equity, helping investors assess the efficiency and success of their investments. While TVPI has its limitations, it remains a valuable tool for measuring the overall performance of a private equity fund. Investors should use TVPI in conjunction with other metrics like MOIC, DPI, RVPI, and IRR to gain a comprehensive understanding of their investments’ performance and make informed decisions for future allocations.

Frequently Asked Questions

What is a good TVPI?

During its initial years, a fund accrues costs before realizing any gains in its portfolio, resulting in a TVPI below 1.0x.

What is the difference between TVPI and MOIC?

TVPI considers both realized and unrealized gains, reflecting overall value. MOIC focuses solely on realized gains, indicating the multiple of invested capital returned.

What is DPI vs TVPI?

DPI (Distributions to Paid-In) measures realized gains returned to investors. TVPI (Total Value to Paid-In) considers both realized and unrealized gains.

How is TVPI calculated?

TVPI is calculated by dividing the total value of distributions and remaining portfolio value by the total capital contributed by investors.

Is TVPI the same as ROI?

No, TVPI and ROI (Return on Investment) are different. TVPI assesses overall value from distributions and unrealized gains, while ROI focuses on a single investment’s percentage return.

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