Private market investing — including private equity, venture capital, real estate, and private credit — requires a different set of performance metrics than public markets.
Because cash flows are irregular, valuations are infrequent, and assets aren’t marked to market daily, traditional measures like “annual return” or “price appreciation” don’t tell the full story.

Instead, private market investors rely on metrics like MOIC, TVPI, DPI, and RVPI to understand how capital has grown, how much has been realized, and how much value is still locked inside the portfolio.

This article explains these metrics in clear, practical terms and shows how they’re used to analyze private funds and deals.

1. Why Private Market Returns Need Different Metrics

In public markets:

• investments are liquid
• prices update continuously
• returns are realized immediately when sold

In private markets:

• capital is called over time
• cash flows are irregular
• valuations are estimation-based
• assets may be held for 5–12+ years

Traditional metrics fail to capture this complexity.
The industry instead uses multiple-on-invested-capital metrics (MOIC) and cash-flow-weighted metrics (IRR).

This article focuses exclusively on MOIC-based measures.

2. MOIC — Multiple on Invested Capital

MOIC measures how many dollars the investor gets back for every dollar invested.

MOIC=Total ValueTotal Capital Invested\text{MOIC} = \frac{\text{Total Value}}{\text{Total Capital Invested}}MOIC=Total Capital InvestedTotal Value​

Example:

• Invest $1,000,000
• Total value grows to $3,000,000

MOIC = 3.0×

Key point: MOIC does not consider time.
A 3× return over 3 years is very different from a 3× return over 10 years — but MOIC treats them equally.

MOIC is simple but essential.

3. TVPI — Total Value to Paid-In Capital

TVPI is the fund-level version of MOIC.
It measures both realized and unrealized gains.

TVPI=DPI+RVPIPaid-In Capital\text{TVPI} = \frac{\text{DPI} + \text{RVPI}}{\text{Paid-In Capital}}TVPI=Paid-In CapitalDPI+RVPI​

Where:

• DPI = Distributions to Paid-In
• RVPI = Residual Value to Paid-In

TVPI answers:

“How much total value has the fund created relative to the capital contributed?”

A TVPI of:

• 1.0× = you have your money back
• >1.0× = the fund created value
• >2.0× = strong performance
• >3.0× = exceptional performance

Institutional LPs use TVPI as a primary benchmarking tool.

4. DPI — Distributions to Paid-In Capital

DPI measures realized returns only — how much capital has actually been returned.

DPI=Total DistributionsPaid-In Capital\text{DPI} = \frac{\text{Total Distributions}}{\text{Paid-In Capital}}DPI=Paid-In CapitalTotal Distributions​

DPI tells investors:

• how much money they’ve gotten back
• whether the fund is “in the money”
• how much return is already secured

Example:

You invested $1,000,000.
The fund returned $600,000 in cash.

DPI = 0.60×

DPI is a measure of liquidity and realized gain, not total value.

5. RVPI — Residual Value to Paid-In Capital

RVPI measures the unrealized portion of return.

RVPI=Net Asset ValuePaid-In Capital\text{RVPI} = \frac{\text{Net Asset Value}}{\text{Paid-In Capital}}RVPI=Paid-In CapitalNet Asset Value​

If a fund has unrealized investments worth more than what was contributed, RVPI will be greater than 1.0×.

Example:

NAV = $900,000
Paid-in = $1,000,000

RVPI = 0.90×

RVPI shows how much value is still sitting inside the portfolio waiting to be realized.

6. How MOIC, TVPI, DPI, and RVPI Work Together

These metrics provide a full performance picture.

A. MOIC (deal level)

“How much did this investment grow?”

B. TVPI (fund level)

“How much value has the fund generated overall?”

C. DPI (realized returns)

“How much cash have I gotten back?”

D. RVPI (unrealized returns)

“How much value is still on paper?”

Relationship:

TPVI = DPI + RVPI

This unity is why LPs track TVPI so closely — it reflects the entire state of the fund.

7. What Good Performance Looks Like in Private Markets

Venture Capital

• Top-quartile TVPI = 3×+
• Strong MOIC on winners = 10×–50×+

Private Equity

• Top-quartile TVPI = 2×–3×
• DPI rises later in fund life (years 6–10)

Real Estate & Private Credit

• Lower expected multiples
• More emphasis on yield and risk-adjusted return

Infrastructure

• Steady MOIC (1.5×–2×) with long holding periods

Multiples vary dramatically by asset class and risk profile.

8. How Investors Use These Metrics in Practice

1. Fund Selection

LPs compare TVPI across vintages and managers.

2. Portfolio Monitoring

DPI signals fund maturity; RVPI shows remaining upside.

3. Cash Flow Planning

Investors use DPI projections to plan commitments to future funds.

4. Manager Evaluation

Deal-level MOIC reveals:

• sourcing quality
• underwriting discipline
• value-creation capability

5. Benchmarking

Private market benchmarks focus on:

• TVPI
• DPI
• IRR
• PME

Multiples offer clarity that IRR alone cannot provide.

9. Limitations of MOIC-Based Metrics

A. They ignore time.

A 2× MOIC in 3 years is far better than a 2× in 12 years.

B. NAVs may be subjective.

Illiquid assets often rely on model-based valuations.

C. DPI can be misleading early.

Small distributions inflate DPI even if total performance is weak.

D. Multiples hide volatility.

MOIC doesn’t show ups and downs — only the beginning and end.

This is why multiples must be interpreted along with IRR and qualitative analysis.

Final Takeaway

MOIC, TVPI, DPI, and RVPI are the backbone of private-market performance measurement.
Together, they reveal:

• how much value a fund has created
• how much has been realized
• how much is still unrealized
• how a fund compares to peers

Understanding these metrics helps investors evaluate deals, select managers, and manage long-term private-market portfolios with confidence.