Total Value Paid In (TVPI) is a performance metric often used in private equity and venture capital to provide an overview of the return on an investment. It gives the aggregate return, which includes both the realized returns (the returns that have already been distributed to the investor) and the unrealized returns (the estimated current value of the investment that is yet to be returned).
The TVPI metric provides a snapshot of the value generated by an investment, relative to the amount that was originally invested. However, it doesn't take into account the time value of money or the investment period. Hence, it's typically used in combination with other performance metrics like the Internal Rate of Return (IRR) for a more comprehensive understanding of investment performance.
The significance of the TVPI lies in its ability to capture both the realized and unrealized value of an investment, offering a broader perspective on its overall performance than a metric that only focuses on realized returns.
