What are fund returns?
Fund returns are the financial performance metrics that limited partners (LPs) use to evaluate a venture fund’s success — both during the fund’s life and after the final exit. Unlike public equities where price discovery is continuous, VC fund returns are measured against capital called, capital distributed, and the net asset value (NAV) of unrealised portfolio holdings.
The core return metrics
Four metrics dominate LP reporting and pension fund / sovereign wealth fund manager-selection processes:
- DPI (Distributed to Paid-In) — cash actually returned to LPs ÷ capital called. The only metric where the cheque has cleared.
- TVPI (Total Value to Paid-In) — distributions + remaining NAV ÷ capital called. Captures both realised and unrealised value.
- RVPI (Residual Value to Paid-In) — remaining NAV ÷ capital called. The unrealised portion of TVPI.
- IRR — time-weighted return, captures the velocity of distributions.
- MOIC — total return multiple, ignores time. Sometimes used interchangeably with TVPI but technically can differ for partial exits.
Gross vs. net returns
Gross returns are pre-fee, pre-carry. Net returns are what LPs actually receive after the GP’s 2% management fee and 20% carried interest. The “2 and 20” structure typically drags gross MOIC down by 25-40% over a 10-year fund life.
What top-quartile looks like
Industry benchmarks (Cambridge Associates, PitchBook) suggest top-quartile US venture funds target net 3× DPI and 25%+ net IRR. Turkish CMB-licensed venture funds (girişim sermayesi yatırım fonu) are typically benchmarked against the same global metrics, adjusted for FX volatility and exit window dynamics.
Practical implications for founders
Founders rarely see fund-return metrics, but they shape investor behaviour: a fund that has already distributed 1× capital can be patient with later-stage decisions; a fund with weak DPI mid-life pushes harder for exit windows. Knowing where your investor sits in the fund cycle helps in term sheet and exit timing conversations.
Related: Power Law, Carry, IRR, MOIC, J-Curve.