What is RVPI?
Residual value to paid-in capital (RVPI) is a key financial performance metric used in venture capital (VC) and private equity (PE) to measure the current, unrealized value of a fund’s remaining investments relative to the total capital contributed by investors. RVPI indicates how much of the invested capital is still held in unsold portfolio companies, providing a snapshot of the fund’s unrealized potential returns at any given point in its lifecycle.
RVPI in private equity
In the context of private equity, RVPI is especially important for both fund managers and investors. It helps assess the ongoing performance of a private fund by highlighting the portion of remaining value that has not yet been distributed back to limited partners (LPs).
RVPI is often used alongside other performance metrics such as distributed to paid-in capital (DPI) and total value to paid-in capital (TVPI) to give a comprehensive view of both realized and unrealized returns, supporting fund performance evaluation and investment analysis.
Comparing key metrics
Understanding how RVPI compares to other private equity fund metrics is essential for making informed decisions and developing a robust investment strategy.
| Metric | Definition | Focus | Formula |
| RVPI | Residual value to paid-in capital | Unrealized value | Residual value / Paid-in capital |
| DPI | Realized returns | Distributions / Paid-in capital | |
| TVPI | Total performance (realized + unrealized) | (Residual value + Distributions) / Paid-in capital | |
| IRR | Expected rate of return on an investment over time | Discount rate where net present value (NPV) = 0 | |
| MOIC | How much value a fund has created per dollar invested | (Realized value + Unrealized value) / Initial investment |
RVPI formula and calculation
The formula for calculating RVPI is straightforward:RVPI = Residual value / Paid-in capitalHere, the residual value represents the fair market value of all remaining (unrealized) investments in the fund, while paid-in capital is the total amount of capital that investors have contributed to date.
For example, if a fund has received $100 million in capital from investors and the current value of its remaining investments is $40 million, the RVPI would be 0.40. This means that 40% of the invested capital remains in unrealized assets, offering insight into the fund’s future return potential.
How to calculate RVPI
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Determine residual value: Assess the current fair market value of all unrealized investments in the fund’s portfolio. This typically involves third-party valuations or internal assessments based on market comparables.
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Calculate paid-in capital: Sum all capital contributions made by investors to the fund, excluding any capital that has been returned.
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Apply the formula: Divide the residual value by the paid-in capital to get the RVPI ratio.
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