Comparison
TVPI vs NAV: Key Differences Explained
TVPI (Total Value to Paid-In) is a fund performance multiple that combines both realized and unrealized value relative to invested capital. NAV (Net Asset Value) is the current estimated fair value of all unrealized portfolio investments. TVPI includes what's already been returned; NAV only counts what's still held. Together they tell the full story of a fund's performance.
What is TVPI?
TVPI is the most comprehensive fund performance metric — it measures total value created (both realized and unrealized) relative to the total capital invested. Formula: TVPI = (Distributions + Remaining Fair Value) ÷ Called Capital. A TVPI of 2.0x means the fund has generated or holds twice what was invested. TVPI includes DPI (distributed to paid-in, realized gains) plus RVPI (residual value to paid-in, unrealized gains). Early in a fund's life, TVPI is dominated by RVPI (most value is still unrealized). Late in a fund's life, DPI dominates as companies exit. Top-quartile venture funds typically target TVPI of 3.0x or higher over a 10-year life.
What is NAV?
NAV — Net Asset Value — is the current fair market value of all unrealized (still-held) investments in a portfolio, minus any liabilities. In a venture context, NAV represents the current estimated value of companies still in the portfolio that haven't exited. For a VC fund, NAV is typically reported quarterly. Because early-stage company valuations are hard to observe without market transactions, NAV is based on last-round valuations, mark-to-model estimates, or comparable company analysis. NAV forms the 'R' (residual value) in TVPI. As companies exit (IPO, M&A), they move from NAV to realized distributions. NAV can be overstated if portfolio companies' valuations have fallen since their last round (common after the 2021–2022 bubble).
Key Differences
| Feature | TVPI | NAV |
|---|---|---|
| What it measures | Total value (realized + unrealized) vs. invested | Current unrealized fair value of holdings |
| Realized value | Yes — includes distributions to LPs | No — only unrealized holdings |
| Formula | (Distributions + Fair Value) ÷ Called Capital | Sum of current fair values of portfolio companies |
| Stage sensitivity | All stages — grows as exits occur | Early stages — decreases as companies exit |
| Reliability | More reliable as DPI increases | Depends on valuation methodology |
| LP focus | Primary performance benchmark | Input to TVPI, portfolio monitoring |
When Founders Choose TVPI
- →Evaluating overall fund performance for LP reporting
- →Comparing funds across different stages and vintages
- →Assessing whether a fund is on track for target returns
When Founders Choose NAV
- →Monitoring the current estimated value of unrealized investments
- →Understanding how much of a fund's value is still at risk
- →Tracking mark-to-market portfolio changes quarter-over-quarter
Example Scenario
A $100M fund at year 7: called $85M, returned $120M in distributions (Zoom IPO and one acquisition), NAV of remaining portfolio is $80M. TVPI = ($120M + $80M) ÷ $85M = 2.35x. The DPI (realized only) is $120M ÷ $85M = 1.41x — LPs have gotten back more than invested but only 60% of total value. The remaining 40% (the NAV) is still locked in unrealized investments. Whether TVPI ends up at 2.0x or 3.0x depends on how those remaining companies perform.
Common Mistakes
- 1Treating TVPI as a reliable metric early in fund life — it's dominated by unverifiable NAV estimates
- 2Ignoring NAV markdown risk — if portfolio companies raised at 2021 valuations, NAV may be overstated
- 3Comparing TVPI across vintages without adjusting for stage and strategy
- 4Not tracking DPI separately — LPs care most about cash-on-cash returns (DPI), not paper gains (NAV)
Which Matters More for Early-Stage Startups?
DPI is what LPs ultimately care about — that's actual cash returned. TVPI includes NAV which can be unreliable. Use TVPI as a planning tool and benchmark, but the real scorecard is DPI. High TVPI driven primarily by unrealized NAV is a yellow flag — it means the fund is betting heavily on exits that haven't happened yet.