The Ultimate VC Metrics Cheat Sheet

METRICS FLOW DIAGRAM

PORTFOLIO
INVESTORS FUND Companies
+
Securities

Actual/Realized Cash Flows Future/Unrealized Cash Flows

METRICS CALCULATIONS

Paid-in Capital MULTIPLES IRR

(a.k.a. PIC, drawn-down capital, contributed capital)

MOIC ( + )/ Outflows or
Distributed Capital Gross IRR
(net of fees, expenses, and carry) Inflows &
Realized MOIC /
Fund Book Value / NAV Gross Outflows or
Unrealized MOIC /
(after provision for fees, expenses, and carry) Realized IRR Inflows
Gross TVPI ( + )/
Investment Cost / Basis Outflows
(invested capital + deal costs) Net TVPI ( + )/ Net IRR
Inflows &
Investment Proceeds / Returns RVPI / Outflows
(distributions from full or partial liquidation) Net
DPI / Realized IRR Inflows
Investment Book Value / NAV
(before fees, expenses, and carry) Gross Net
The Ultimate VC Metrics Cheat Sheet

MULTIPLES

Metric Highlights A.K.A Commentary

• Best multiple for gauging a GP’s raw investment acumen. • Gross MOIC
Multiple on Invested Capital (MOIC) • Measures a GP’s ability to invest in big winners (measured as if the • Multiple on Money (MOM) • Clarify whether “gross multiple” means:
GP invested their own dollars). • Book Value on Invested Capital a. Multiple on invested capital (MOIC)
• Another representation of a GP’s investment acumen. • “TVPI” b. Multiple on paid-in capital (gross TVPI)
Gross Total Value to Paid In Capital • “TVPI” almost always means “net TVPI”.
• Measures a GP’s ability to turn LPs’ dollars into big winners • Gross TVPI
(Gross TVPI)
(measured as an investment of LPs’ dollars). • Book Value on Paid-In Capital
• “TVPI”
Net Total Value to Paid In Capital • Multiple often quoted by GP’s, but ultimately only the second most
• Net TVPI
(Net TVPI) important metric for LP’s.
• Net Multiple
• “Paper value” of the fund. • Equity Value Multiple • No single “right way” to provision for carry, fees, and
Residual Value per Paid In Capital
• Important metric that can look impressive early in a fund lifecycle. • Book Value Multiple expenses. Make sure you’re comparing “apples to apples”
(RVPI)
• Ultimately all that matters is how (or whether) RVPI turns into DPI. • Unrealized Value Multiple when comparing net multiples.

Distributions per Paid In Capital • Most important metric to LPs (and by extension GPs) at the end of
• Realized Value Multiple
(DPI) the fund.

INTERNAL RATE OF RETURN (IRR)

Metric Highlights Commentary

• Rate of return for measuring a GP’s raw investment acumen.
Gross IRR • Always clarify whether PIC or invested capital is used in gross IRR calculations. It can make a
• Measures a GP’s ability to generate returns on invested capital.
substantial difference.
Gross Realized IRR • Best rate of return for measuring a GP’s raw investment acumen (as it measures actual returns). • Can be applied to funds, companies, and securities.

• Multiple often quoted by GP’s, but ultimately only the second most important metric for LP’s. • No single “right way” to provision for carry, fees, and expenses in the unrealized value in
Net IRR
• Measures a GP’s ability to generate returns on LP’s contributed capital. the IRR calc.
• Most important rate of return metric for LP’s at the end of the fund. • As with net multiples, net IRRs are only used at the fund level.
Net Realized IRR • No realistic net IRR for investment in companies or securities.
• Gives rise to the all-important J-curve.

Gross Net