Every private fund report leads with the same four acronyms — Net IRR, TVPI, DPI, and RVPI - and every allocator, consultant, and GP reads them slightly differently depending on what they're trying to prove. None of the four is wrong on its own. The problem is reading just one and assuming it tells the whole story.
This guide breaks down what each metric actually measures, why funds at the same stage can show wildly different numbers for reasons that have nothing to do with skill, and how to read all four together instead of anchoring on whichever one looks best.
A young fund and a mature fund can show identical TVPI and tell completely different stories. Early in a fund's life, TVPI is almost entirely RVPI — value on paper, nothing realized yet. As the fund matures and exits happen, that value shifts from RVPI into DPI. Comparing a 2023-vintage fund's DPI to a 2016-vintage fund's DPI without adjusting for that is one of the most common diligence mistakes.
The identity that explains almost every apparent contradiction between two funds' headline multiples.
Net IRR rewards speed — a fund that returns 2x in three years will show a much higher IRR than one that returns 2.5x over eight. TVPI rewards magnitude but ignores time value entirely. DPI is the only metric measuring cash actually in hand, which is why LPs increasingly weight it heavily in re-up decisions. RVPI is a claim on future value, not a guarantee of it — the number is only as reliable as the fund's own marks.
The practical approach: use Net IRR and TVPI together to judge overall performance, then check DPI to see how much of that performance has actually been proven with cash, not just marked on paper.
None of these metrics is complete on its own, and no single number should carry a manager evaluation or a fundraising pitch by itself. Read together, and adjusted for vintage, they're the closest thing private markets has to a common language for performance.