Distributions Per Investment (DPI)

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Distributions Per Investment DPI) is a financial term similar to Return On Investment (ROI). Both these terms tell us of how much money has been made through investments.They are are of use for venture capital firms and investors investing into VC funds. To get DPI, you divide Distribution by Paid-In-Capital (Distribution/Paid-In-Capital). As it is straight forward math, a DPI of 3x means the fund being evaluated provided a return 3 times the paid-in capital. Therefore, the more a fund ditributes as a proportion of the Paid-In-Capital, the better. Meaning, the higher the DPI, the more succesful the fund. However as DPI only tells us the totality of the returns of the investments made by a fund to date, as an investor, one cannot tell the actual performance of the individual business that the fund invested in. This is espically true if the venture capital fund is yet to exit some of the business as they are yet to get to exit point. For example, some of the fund’s investments may be tied up as equity in business that are yet to mature ( some which may eventually fail) but are still considered to be ‘in progress’ and are therefore yet to be included in the fund’s failure rate. As an investor in a venture capital fund you need a more ‘precise’ measure such as the Residual Value To Paid-in-Capital (RVPI) to be able to tell how sucessful VC fund really is.


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