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VC Fund Returns: DPI vs TVPI.

Models how Venture Capital GPs use unrealized paper markups (TVPI) to raise follow-on funds while masking dismal actual cash returns to LPs (DPI).

## The TVPI Illusion

When a Venture Capitalist brags on Twitter that their $150M fund is 'Tracking at a 3.1x TVPI', it sounds like they tripled their investors' money. The brutal reality is that TVPI includes "Unrealized Value"—companies whose paper valuations were artificially pumped up by other VCs in later funding rounds.

### FAQ

**Q: Why do LPs care so much about DPI?**
A: Distributed to Paid-In Capital (DPI) means the company IPO'd or sold, and cash was wired back to the pension fund. A 3.1x TVPI with a 0.2x DPI means the VC took $100M from investors, only paid back $20M, but mathematically promises that the *rest* of the startups are totally worth $300M (even though they are burning cash and haven't exited). VCs use high TVPI purely to raise Fund II before the startups in Fund I go bankrupt.