Deep Dive: Venture Capital Metrics

A tactical guide for GPs, LPs, and founders

In VC, metrics aren’t just dashboards—they’re decision tools.
Whether you're raising your next fund, pitching LPs, or evaluating a founder’s pitch deck, the right metrics—used in the right context—can shape outcomes. The wrong ones? They can mislead, inflate, or obscure the real story.

This isn’t a glossary. It’s a tactical breakdown of the key metrics across funds, startups, and firms—what they mean, when to use them, and how to interpret them without getting played.

Fund Metrics: What LPs Actually Care About

If you’re managing a VC fund, your real customer is the LP. And LPs read numbers like term sheets—they look past the headline and go straight to the terms behind the terms.

TVPI (Total Value to Paid-In)

What it is: Overall value—realized and unrealized—per dollar invested
When to use: Mid to late fund life
Good looks like: 2.0×+ is strong
LP interpretation: High TVPI with low DPI = paper gains. High TVPI with high DPI = real gains.

⚠️ Red flag: 2.5× TVPI + 0.2× DPI = might be sitting on inflated marks.

DPI (Distributions to Paid-In)

What it is: Actual cash returned to LPs
When to use: Mid to late fund life
Good looks like: 1.0× = breakeven; 1.5×+ = solid
LP interpretation: Real money talks. Low DPI = no liquidity. High DPI = you’ve delivered.

⚠️ Red flag: Early DPI spikes may signal premature exits to boost optics.

RVPI (Residual Value to Paid-In)

What it is: Unrealized value still held in the fund
When to use: Early to mid fund life
Good looks like: 0.8–1.2× (early), <0.3× (late)
LP interpretation: Signals potential upside—but is it real, or just markup theatre?

⚠️ Red flag: High RVPI in late years = stalled exits or overvaluation.

IRR (Internal Rate of Return)

What it is: Time-adjusted annual return
When to use: All stages, especially mid-late
Good looks like: 20%+ net = top quartile
LP interpretation: Measures velocity, not just volume.

⚠️ Red flag: High IRR + low DPI = could be front-loaded optics.

MOIC (Multiple on Invested Capital)

What it is: Gross return multiple, pre-fees
When to use: Deal-level or fund lens
Good looks like: 2.5–3.5× (fund); 5×+ (deals)
LP interpretation: Simplifies money in/money out—no time weighting.

⚠️ Red flag: 3× MOIC over 15 years = 7% IRR. Not that impressive.

Startup Metrics: How VCs Evaluate a Deal

Great decks don’t just tell stories—they prove them. These are the numbers that shape conviction when VCs decide to write a check.

MRR / ARR

What it shows: Predictable revenue
VC lens: ARR at Series A? Look for $1M+ and 2–3× YoY growth
Context that wins: Pair ARR with growth rate and churn. Flat ARR is a red flag, even if the top-line looks good.

CAC, LTV, and Payback

What they show: Growth efficiency

• LTV:CAC: 3:1 = healthy; 5:1 = excellent
• Payback: <12 months = strong
  VC lens: Are you scaling profitably or burning to buy growth?

Pro tip: Show CAC split by channel (paid vs. organic). Investors want scalable economics.

Gross Margin

What it shows: Capital retention after COGS

• SaaS: 75–90%
• CPG: 40–60%
  VC lens: Margin = money to reinvest. Low margin? Better have a reason.

Churn Rate

What it shows: Product-market fit

• <5% monthly churn (SMBs)
• <1% monthly (Enterprise)
  VC lens: High churn = leaky bucket. Segment it to show what’s fixable.

Burn Rate & Burn Multiple

What they show: Capital efficiency

• Burn Multiple = Burn / Net New ARR
• <1× = elite; 1–1.5× = solid
  VC lens: Is growth worth the spend?

⚠️ Red flag: High burn + low growth = runway risk.

NPS

What it shows: Customer advocacy

• 50+ = excellent
  VC lens: Combine NPS with quotes or testimonials. Signal, not fluff.

Platform Metrics: The Operating System of Top VC Firms

Behind every top-performing fund is an engine that runs well. These metrics won’t show up in LP reports, but they determine whether your firm actually scales.

Deal Flow

• Inbound vs. outbound
• Conversion funnel: intro → diligence → term sheet
  Why it matters: Volume without conversion = inefficiency.

Time in Deal Stages

Track: Avg. time from first meeting → signed term sheet
Why it matters: Speed = competitive edge. Don’t lose great founders to slow process.

Sourcing Insights

Track

• Sector
• Stage
• Partner
  Why it matters: Know what’s working—and double down.

LP Fundraising Metrics

• Forecasted capital raise
• LP pipeline by type
• Close rates
  Why it matters: Fundraising is a pipeline. Treat it like sales.

LP Engagement

• Email opens, event attendance, CRM touches
  Why it matters: High engagement = warm re-ups. Low = churn risk.

Regional Nuance: Metrics Don’t Travel Equally

North America

• Fast exits → high IRR
• TVPI spikes early
• DPI within 4–5 years is expected

Europe

• Conservative TVPI
• DPI builds slower, more predictably
• NAVs typically under-marked

Asia

• High RVPI for longer
• DPI delayed (years 9–12 common)
• NAVs often inflated—LPs scrutinise harder

How Metrics Get Manipulated (and What to Watch)

• IRR games: Small early exits boost IRR, not fund performance
• TVPI mirages: Inflated NAVs ≠ real value
• Churn cohort slicing: Cherry-picked data hides real risk
• LTV based on small samples: Hope ≠ signal

Strategic Use of Metrics (Per Persona)

For Founders

• Metrics aren’t theatre—they’re narrative anchors
• Show how CAC, burn, and margins tie to milestones
• Be honest about tradeoffs and the road ahead

For GPs

• Don’t over-index on one number
• IRR, TVPI, DPI together = credibility
• Show how RVPI is being de-risked

For LPs

• Ask for markdown protocols and scenario stress tests
• Calibrate benchmarks by strategy, vintage, and region
• Good funds don’t hide their assumptions

Final Word

Great metrics don’t raise capital. Great context does. Every chart has a backstory. The best GPs and founders know how to tell it—clearly, confidently, and honestly.