What is DPI?
DPI (Distributed to Paid-In) measures the cash actually returned to LPs divided by the capital LPs have paid in. A DPI of 2.0× means the fund has distributed twice the paid-in capital — the cheque has cleared. DPI is the cleanest single metric of real venture fund performance because it cannot be inflated by NAV mark-ups or accounting choices.
The formula
DPI = Cumulative Distributions ÷ Paid-In Capital. Distributions include cash, stock distributions (often immediately monetised), and in-kind transfers. Recycling — where early distributions are re-called for new investments — affects the denominator but not the realisation reality.
Why LPs prioritise DPI
An LP cannot spend TVPI or IRR — only DPI. Pension funds, endowments and sovereign wealth funds rebalance their allocations based on actual cash returned, not paper NAV. A GP raising the next vintage with strong DPI gets re-upped easily; a GP with all paper TVPI and weak DPI faces tougher LP commitments.
DPI through the fund cycle
DPI is naturally zero for the first 3-4 years of a fund (investments deploying, no exits yet). It rises non-linearly as exits cluster — one fund-returner can move DPI from 0.3× to 1.5× in a single quarter. Top-quartile US venture funds (Cambridge Associates) hit 1.0× DPI by year 8 and target 3.0×+ by year 12.
Practical implications for founders
Founders rarely see GP-level DPI but should ask: “what’s your fund’s current DPI status?” A GP at year 9 with weak DPI is highly motivated to engineer your exit (even sub-optimal), to support their next fundraise. A GP at year 4 with strong DPI from earlier exits has runway for patience.