How Partial Realizations Affect Venture Fund MOIC and DPI?
NVCA's 2026 Yearbook showed improvement in exit value in 2025, but not a full return to 2021 liquidity. Realizations can improve while still remaining below prior peak conditions. Partial sales may be an important bridge between paper value and DPI.
NVCA reported $217 billion of US VC exit value in 2025, 2x 2024 but still 27% of the 2021 peak.
Cash Returned Changes DPI Before It Changes TVPI
A partial realization turns part of a paper gain into cash while leaving the fund with future upside. It raises DPI because money has been distributed. It may leave TVPI almost unchanged if the cash sold simply replaces an equal amount of unrealized value. The sale therefore does two jobs: it provides liquidity to LPs and changes the risk of the remaining position. Whether it improves the final fund result depends on the price received, the value of the shares kept, and what the fund does with the cash.
See the Metrics Side by Side
| Point in time | Cash distributed | Remaining value | DPI | RVPI | TVPI |
|---|---|---|---|---|---|
| Before sale | $0 | $150M | 0.0x | 1.5x | 1.5x |
| After sale at carrying value | $50M | $100M | 0.5x | 1.0x | 1.5x |
This example assumes all paid-in capital is $100 million and the shares are sold at the value already used in the fund's mark. DPI rises from zero to 0.5x, RVPI falls from 1.5x to 1.0x, and TVPI stays at 1.5x.
A Higher DPI Does Not Settle the Final Answer
LPs often prefer cash to an old mark because cash can be spent, reallocated, or used to meet other capital calls. But selling too much of a great company can reduce the final multiple. The fund may improve near-term liquidity and give up a larger later gain. The reverse is also possible. A partial sale can reduce concentration and lock in a strong result before the exit market changes. The decision should compare the expected return on the shares kept with the certainty and portfolio value of cash today.
Check How the Sale Price Was Set
A sale above the carrying value creates a realized gain and may support a higher mark on the remaining shares, subject to the valuation policy. A sale below the mark may reveal that the old value was too high or that the buyer received a different security or set of rights. Transaction costs, SPV economics, transfer fees, taxes, and carried interest can also reduce the amount that reaches LPs. Reporting should reconcile the headline sale value with the actual distribution.
Questions LPs Should Ask
- Show both shares and percentage ownership.
- Was the sale at, above, or below the prior mark? Explain any difference in rights or terms.
- What remains? Give the cost, current value, and expected exit range of the retained position.
- State whether it was distributed, recycled, or held.
- Show the position before and after the transaction.
A partial realization is most useful when the manager reports both sides: the cash secured and the upside still at risk.
How the Metrics Move
A $100 million fund distributing $40 million from a partial sale has 0.4x DPI. If it still holds $180 million of residual value, TVPI is 2.2x before fees and updated marks.
NVCA reported $217 billion of US VC exit value in 2025, which shows why realized exit environments influence DPI progress.
Interpreting the Remaining Stake
If the remaining $180 million mark is later reduced by 25%, residual value falls to $135 million. With $40 million already distributed, total value becomes $175 million and TVPI falls from 2.2x to 1.75x.
A partial realization increases DPI while the remaining position continues to drive unrealized value and TVPI.
Partial Realization Metric Bridge
Partial sales convert some MOIC into DPI, but residual marks still drive the total return.
View bridge data and assumptions
| Component | Amount | Multiple on $100M fund |
|---|---|---|
| Distributed value | $40M | 0.4x DPI |
| Residual value | $180M | 1.8x RVPI |
| Total value | $220M | 2.2x TVPI |
Separate Cash Returned From Value Remaining
An investor should not need to rely on the manager's conclusion; the inputs should be visible. The exit stake may differ sharply from the entry stake after dilution and follow-on financing.
A Partial Sale Can Improve the Portfolio Without Calling the Top
A manager does not need to believe a company has reached its maximum value before selling some shares. A partial realization can return capital, reduce concentration, fund other obligations, and leave the fund with meaningful upside. The decision should compare the certain cash received with the expected return on the shares retained. It should also consider preference terms, transfer restrictions, buyer rights, taxes, and whether the sale changes the value used for the remaining position.
LPs should see both sides after the transaction: how much cost and value became realized, and how much company exposure remains. DPI improves only the cash side of the story. The retained stake still carries company, timing, and valuation risk.
Frequently Asked Questions
Does a partial realization reduce upside?
Sometimes: It can reduce upside if the company keeps compounding, but it can also reduce concentration and return cash to LPs.
Is DPI more important than MOIC?
They answer different questions: DPI measures cash returned. MOIC and TVPI include unrealized value.
Related Reading
MOIC vs IRR, selling before exit, and unrealized value reporting.