TLDR: Distributions to paid-in has overtaken paper marks as the number limited partners trust, and the 2017 vintage shows even strong funds returning roughly a quarter of committed capital eight years in.
The marks were real. The cash was not.
For most of the last decade, venture funds were graded on paper. TVPI (total value to paid-in) and IRR (internal rate of return) both climbed through the 2021 boom, and every quarterly letter glowed. The catch is structural: a markup is an opinion, and a pension fund cannot spend an opinion. As exits thinned, limited partners (LPs) moved their attention to the one figure no general partner (GP) can inflate — DPI (distributions to paid-in), the cash a fund has actually wired back. Peter Walker, who leads Carta’s Insights team, describes DPI as “the metric that rules them all”.
The 2017 vintage, eight years on
The 2017 vintage caught a near-perfect exit window in 2021, which makes its numbers a generous test rather than a harsh one. On Carta, the median 2017 fund still held about 0.27x DPI in early 2025 — a quarter of capital back, eight years in. The strong performers stayed modest: across funds since 2017, even those at the 90th percentile have returned roughly half their capital. Timing compounds the patience problem. At the three-year mark, about a quarter of 2017 funds had returned a single dollar; a majority crossed into positive DPI only near year five. Venture quietly became a twelve-to-fifteen-year asset class while its partnership agreements still read like a ten-year one.
Why LPs price the marks at a discount
The shift to DPI is a behavioural correction as much as a financial one. Loss aversion, the asymmetry Daniel Kahneman and Amos Tversky formalised in prospect theory, teaches allocators that a markup reversed hurts more than a markup banked feels good, so seasoned LPs hold unrealised value at a steep mental discount. The mirror image sits on the GP side as the disposition effect: a manager who marks a winner up and defers the sale protects a flattering TVPI while starving the LP of cash. Mental accounting completes the picture — a dollar distributed and a dollar of paper gain occupy different ledgers in an allocator’s mind, and only one of them funds next year’s commitments. DPI wins because it is the number immune to all three biases.
The liquidity toolkit LPs now expect
Pressure this real reshapes behaviour, and the exit toolkit has widened accordingly. GP-led secondaries and continuation funds — vehicles that move a prized asset into a new structure and return cash to existing LPs — have moved from a sign of weakness to a deliberate liquidity instrument. In the United States, LPs increasingly anchor their diligence in the Institutional Limited Partners Association (ILPA) reporting templates to compare realised performance like for like; in Europe and Switzerland, the same standardisation pressure arrives through LP advisory committees demanding distribution timelines rather than marks. Across all three markets the message is identical: manufacture some liquidity on a credible schedule, because the share of funds beginning to return capital has jumped across vintages and an LP now reads a thin DPI as a reason to pass on the next fund.
What this means, by seat
The correction rewards managers who adjust early and punishes those who defend the paper story.
General partners: report TVPI and DPI side by side with a credible path between them, and set the distribution clock explicitly at commitment. A fund that surprises its LPs on duration loses the re-up regardless of marks; a fund that pre-committed to a twelve-year cash curve keeps trust even when it is slow.
Limited partners: underwrite the realised curve, not the headline. Ask for DPI by vintage and the named liquidity plan — secondary, continuation vehicle, or strategic sale — before funding Fund III, and treat a manager who only talks markups as carrying undisclosed duration risk.
Founders: read your investor’s DPI pressure as your own. A backer under-distributed to its LPs will weigh secondaries, earlier exits and follow-on capacity differently, and that calculus lands directly on your cap table and your timeline.
The marks made the last cycle look extraordinary. The distributions decide who raises the next one, and in a market that has relearned the difference between value and liquidity, the only number that fully clears is the one already sitting in the LP’s account.
References
- Peter Walker / Carta, For venture fund LPs, DPI is “the metric that rules them all.” https://carta.com/data/vc-dpi-2024/
- Carta, VC Fund Performance, Q1 2025. https://carta.com/data/vc-fund-performance-q1-2025/
- Institutional Limited Partners Association (ILPA), Reporting standards and templates. https://ilpa.org/
- Kahneman, D. & Tversky, A. (1979), Prospect Theory: An Analysis of Decision under Risk. Econometrica.
