Fund Structure
Unrealized Value
The current estimated value of portfolio investments that have not yet been exited — also called paper gains or unrealized gains.
Unrealized value (or RVPI — Residual Value to Paid-In) represents what a fund's remaining portfolio is worth based on current marks, without any cash having been returned to LPs. It's the 'paper' portion of total fund value (TVPI).
Unrealized value is inherently uncertain — marks are based on most recent rounds or comparable company analysis, not actual transaction prices. During bull markets, unrealized values can be dramatically overstated; corrections reveal the gap between mark and reality.
In Practice
A fund shows TVPI of 3x, but DPI (actual cash distributed) is only 0.5x. The remaining 2.5x is unrealized — it looks great on paper but hasn't been converted to actual LP returns. If the market turns, that 2.5x could become 1x quickly.
Why It Matters
Sophisticated LPs always ask for DPI alongside TVPI. A fund with high TVPI and low DPI is essentially unproven — the gains exist only in spreadsheets. The 2022 correction destroyed enormous amounts of unrealized value that was being counted as real.