TVPI is total value (distributions plus residual value) divided by paid-in capital, and it always equals DPI plus RVPI. DPI is the realized part, RVPI is the unrealized part, and MOIC is total value divided by invested capital instead of paid-in capital. Private equity carries 8-12% of CAIA Level I (CAIA Association®), and you need these multiples to evaluate any fund. Public equity is measured with time-weighted returns, Sharpe ratios and standard deviations. Private equity uses cash multiples and IRR instead, and these four are what LP-GP reporting, secondary market pricing and private-fund due diligence run on.
The four multiples
Four numbers come before the ratios:
- Paid-in capital (PIC): cumulative capital called from LPs, including investments, management fees and expenses.
- Invested capital (IC): capital deployed into portfolio companies, excluding management fees and partnership expenses.
- Distributions (D): cumulative cash returned to LPs from realizations (sales, dividends, recapitalizations).
- Residual value (RV), or net asset value (NAV): the GP's mark of the fair value of the remaining unrealized investments.
A fund that calls $100M from LPs but deploys only $90M into deals, because $10M went to fees, has PIC = $100M and IC = $90M. The LP cares about PIC. The GP often markets MOIC against IC, which makes the ratio look better.
So you'll see a GP pitch deck quote a 2.5x MOIC and a 1.9x TVPI on the same fund, and both can be technically correct because they use different denominators. The MOIC reflects deal-level performance and the TVPI reflects LP economics, so always ask which denominator the GP is using.
TVPI: total value to paid-in
TVPI is the LP's total return multiple, what they've received plus what's still expected over everything they put in, fees included. A TVPI of 1.0x is break-even, 2.0x means the LP doubled their money (net of GP fees, before adjusting for time), and anything below 1.0x at fund maturity means the fund lost money.
TVPI ignores time. A fund that returns 1.8x in 4 years is much better than one that returns 1.8x in 12, so read TVPI next to IRR. Cambridge Associates and Burgiss both report quartile distributions of the two side by side for that reason.
DPI: distributions to paid-in
DPI is the realized part of TVPI, counting only cash that has come back to the LP. It's also called the realization multiple or cash-on-cash return, and since no GP mark can inflate it, it's the most conservative of the four.
For a mature fund (year 8 or later), DPI is the headline number, and a fund with 2.0x TVPI but only 1.1x DPI is still leaning on unrealized marks. Secondary buyers, who pay a discount to NAV, care about the realized cash record more than the GP's marks. And an LP deciding whether to commit to Fund III often weights Fund I's DPI far more than Fund II's TVPI, since Fund II is too young to mean much.
RVPI: residual value to paid-in
RVPI is the unrealized part, the value still sitting in the GP-marked NAV of unsold companies. By construction,
and the split shows where a fund is in its life. A young fund (year 2) might have a TVPI of 1.1x with DPI of 0.0x and RVPI of 1.1x. A mature fund (year 12) might have a TVPI of 2.0x with DPI of 1.9x and RVPI of 0.1x.
A high RVPI on a fund that should be winding down (year 9 or later) is a warning sign. The GP may be holding companies past their natural exit window because the market won't pay the marked price, the marks may be aggressive with a haircut coming, or a fund extension may be riding out a cyclical low. None of these is necessarily fatal, but each one is worth checking.
MOIC: multiple on invested capital
MOIC divides by invested capital (what went into deals) rather than paid-in capital (what the LP gave the fund). With no fees or expenses it would equal TVPI. In practice it's always higher, because the denominator is smaller. It's the deal-level measure, since a GP looking at one exit cares about the return on the equity check rather than the LP's fee load. "Gross MOIC" usually means before GP carry and fees and "net MOIC" means after carry. CAIA stems often say which one they want, and if the stem doesn't specify, assume gross.
Reading them over a fund's life
In a fund's first 2-3 years, fees are being called but distributions haven't started. Investments are marked at cost and the losers get written down, so cumulative TVPI sits below 1.0x and IRR runs negative, in a pattern like this:
Scroll horizontally to view all columns.
| Year | TVPI | DPI | IRR |
|---|---|---|---|
| 2 | 0.85x | 0.00x | -10% |
| 4 | 1.10x | 0.20x | 5% |
| 6 | 1.45x | 0.65x | 12% |
| 8 | 1.80x | 1.40x | 18% |
| 10 | 2.00x | 1.85x | 19% |
That shape, down and then sharply up, is the J-curve. A fund at 0.85x TVPI in year 2 isn't failing, and LPs who panic and sell on the secondary market in year 2 usually take a big haircut to NAV.
A fund's vintage year is the year it makes its first investment (some sources use first close), and you only compare a fund with others from the same vintage, which faced the same deal market, exit market and macro environment. Benchmark providers such as Cambridge Associates publish TVPI quartiles by vintage year, so check where a fund sits against its own vintage's median and top-quartile cutoff rather than reading its multiple on its own. A 2010-vintage fund had a much friendlier exit market in years 5-8 and should have a higher absolute TVPI, so comparing it directly with a 2018 fund gives you the wrong picture.
MOIC, TVPI, DPI and RVPI all ignore time, so the standard scorecard adds IRR, which accounts for time and is sensitive to when capital gets called. The Kaplan-Schoar PME (Public Market Equivalent) is the standard test of whether the IRR justifies the illiquidity. CAIA Level I asks you to explain the PME method, and Level II has you calculate the Long-Nickels and Kaplan-Schoar versions.
What CAIA® Level I tests
- Direct calculation: given PIC, IC, distributions and NAV, compute each multiple.
- PIC versus IC: a stem might describe a $500M fund with $50M of fees, so PIC = $500M and IC = $450M. TVPI uses 500 and MOIC uses 450.
- DPI as a maturity signal: given two funds with the same TVPI, say which is more mature from the DPI/RVPI split.
- J-curve interpretation: why a year-2 TVPI of 0.9x isn't necessarily bad.
- Vintage comparison: why comparing absolute TVPI across vintages is misleading.
Most mistakes are about denominators. Committed capital is the LP's total commitment ($100M), PIC is what's been called so far ($60M in year 4, perhaps), and TVPI divides by PIC. MOIC divides by IC, not PIC. Two other mistakes are adding IRR to TVPI when they measure different things, and taking RVPI at face value when GP marks are estimates you should check against DPI and the secondary market.
Doing the arithmetic right with the wrong denominator is an easy way to lose these, so name the denominator first on every question and check it against the definition before you divide. The CAIA Level I formula sheet has the four formulas and the J-curve, and the free CAIA Level I question bank has a Private Equity topic filter for drilling them.