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Ask an LP what they want to see from a fund manager and the answer has changed. For years, IRR dominated fund performance conversations. Today, the first question out of many LPs' mouths is about DPI: how much has actually been distributed? The shift reflects a harder environment for exits and a more disciplined institutional investor base. This post covers which metrics LPs prioritize, what each one actually signals, and how fund managers should structure their performance narrative for 2026.
The Metrics LPs Evaluate and What Each One Tells Them
LPs do not evaluate private funds on a single number. Institutional investors — pension funds, endowments, family offices, sovereign wealth funds — use a set of interconnected metrics that together describe whether a manager has created value, returned cash, and outperformed what the LP could have earned elsewhere.
Dakota Marketplace tracks performance data across more than 18,000 private investment funds, spanning private equity, private credit, venture capital, private real estate, infrastructure, and hedge funds. The metrics below are the ones institutional LPs use to evaluate those funds.
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Metric
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What It Measures
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Primary Use
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DPI
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Cash actually returned to LPs
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Realized performance; first filter in re-up decisions
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TVPI
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Total value created (realized + unrealized)
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Overall fund performance snapshot
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RVPI
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Remaining unrealized value
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How much future upside (or risk) still sits in the portfolio
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Net IRR
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Annualized return after fees and carry
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Cross-manager and cross-strategy comparison
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Gross IRR
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Annualized return before fees and carry
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Investment team skill, isolated from fee structures
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No single metric tells the complete story. A fund with a high TVPI and low DPI may have strong marks on paper but limited realized value. A fund with strong Net IRR built on subscription credit lines may look better than the underlying portfolio warrants. LPs have become more sophisticated about reading these metrics in combination.
1. DPI: The Metric That Now Opens Re-Up Conversations
DPI (Distributed to Paid-In Capital) measures how much cash has actually been returned to investors. A fund with a 1.3x DPI has distributed $1.30 for every $1.00 of invested capital.
Formula: DPI = Distributions ÷ Paid-In Capital
DPI has moved from a secondary metric to the first question many LPs ask when a re-up comes across the desk. The reason is that institutional LPs fund new commitments partly from distributions on existing funds. When exits slow and distributions compress, LPs face a cash flow mismatch between what they committed to new funds and what they are receiving from older ones. DPI is the direct measure of that pressure.
What LPs look for:
- A credible realization timeline for remaining unrealized value, not just a current DPI snapshot
- DPI progression across fund vintages — whether the manager has consistently distributed capital across fund cycles, not just in favorable market conditions
- Distribution timing relative to vintage peers: a fund lagging its cohort on DPI warrants explanation
Fund managers should lead with DPI in LP update materials, not bury it in appendices. Presenting it proactively signals alignment with LP cash flow needs.
2. IRR: Still Required, But Under More Scrutiny
Net IRR (Internal Rate of Return) is the annualized return earned by investors after all fees and carried interest. It remains the standard for cross-strategy comparison.
Formula: Net IRR accounts for the timing of all cash flows — capital calls, distributions, and residual value — and expresses them as an annualized rate after fees and carry.
IRR's limitations are now a standard part of LP due diligence conversations. The main issue: subscription credit lines delay capital calls, which compresses the measurement period and can inflate IRR without generating additional investment returns. An LP calculating IRR from the date the subscription line is drawn down rather than from when the capital was committed may see a materially different number.
The distinction between Gross IRR and Net IRR matters equally:
- Gross IRR reflects investment team performance before fees and carry — useful for evaluating whether the underlying portfolio generated returns
- Net IRR reflects what investors actually earned — the number LPs benchmark against their target hurdle rates and competing managers
Fund managers should present Net IRR alongside a gross-to-net waterfall and, where subscription lines are used, a restatement of IRR on an unfacilitated basis. LPs are calculating this themselves; managers who provide it proactively save time and build credibility.
3. TVPI and RVPI: The Full Picture of Value Creation
TVPI (Total Value to Paid-In Capital) combines cash already returned with the remaining portfolio value. RVPI (Residual Value to Paid-In Capital) isolates the unrealized portion.
Formulas:
- TVPI = (Distributions + Remaining Portfolio Value) ÷ Paid-In Capital
- RVPI = Remaining Portfolio Value ÷ Paid-In Capital
TVPI gives LPs a complete value creation picture across a fund's life, while DPI shows what has been realized. The gap between them — RVPI — is where LP scrutiny has intensified. A high RVPI in a fund approaching the end of its life raises questions about exit feasibility, valuation methodology, and whether NAV marks reflect realistic transaction prices.
Post-2022, LPs apply more skepticism to unrealized marks. The same portfolio company that might have supported a 2.5x RVPI in 2021 based on revenue multiples may be carrying materially different marks today. LPs increasingly ask for portfolio-company-level detail on RVPI, not just a fund-level multiple.
What fund managers should provide:
- A company-by-company realization narrative for RVPI: expected exit timeline, method (trade sale, secondary, IPO), and sensitivity to market conditions
- Valuation methodology disclosed and consistently applied — any methodology changes should be communicated to LPs proactively, not discovered in a DDQ
4. PME: The Benchmark That Separates Institutional from Retail LPs
The Public Market Equivalent (PME) compares private fund performance to what the same capital, deployed and returned on the same schedule, would have earned in a public index. A PME above 1.0 means the fund outperformed the benchmark.
PME answers the question institutional LPs ultimately care about: did committing capital to this private fund — with its illiquidity, complexity, and fees — actually generate better returns than a passive public market allocation? Sovereign wealth funds, large endowments, and public pension funds have incorporated PME into their due diligence processes for years. The metric is spreading to mid-market LPs as benchmarking infrastructure has become more accessible.
Key considerations for fund managers:
- Index selection matters: using an inappropriately narrow or broad index can distort PME results materially. Fund managers should select the benchmark most appropriate to their strategy and disclose the rationale
- Presenting PME proactively, with sensitivity analysis against alternative indices, signals analytical credibility — most managers avoid it, which creates an opportunity for those willing to engage
- PME context: private equity has historically outperformed public markets over long periods, but the margin of outperformance has compressed in recent vintages. LPs are paying close attention to this trend
What LPs Look For When Fund Managers Present Performance
Decision timeline: Re-up decisions for established LP relationships typically run three to six months from formal outreach to commitment. First-time commitments to a manager take nine to eighteen months across most institutional channels.
What makes them say yes:
- DPI at or above vintage-year peer median with a credible, company-level realization plan for remaining RVPI
- Net IRR with full gross-to-net waterfall and a subscription-line-adjusted restatement where applicable
- PME above 1.0 against an agreed benchmark, with the fund manager selecting the index and defending the rationale
- Attribution analysis showing why returns were generated: sector selection, operational improvement, multiple expansion — not just that returns occurred
Find the LPs Who Are Evaluating Funds Like Yours
Dakota Marketplace tracks institutional allocators that actively commit capital to private funds, including pension funds, endowments, family offices, insurance companies, and sovereign wealth funds. Filters include:
- Investment preference by asset class (private equity, private credit, infrastructure, venture capital)
- Fund size minimum and maximum
- Geographic mandate and focus
- Decision-maker contacts with direct email and phone
Fund managers can identify which institutional LPs are active in their strategy, what peer funds those LPs have committed to, and how to prioritize outreach based on allocation fit. Book a demo to see the data.
