#219 Size Matters in VC (Cont'd) & DPI / Premium Carry Templates
& What It Means for 2025+
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Teaser: Waterfall Calcs for Carried Interest Scenarios
Happy Friday folks - jumping right in here! We get asked a lot about different carried interest scenarios by LPs, GPs, and CFOs / Finance Pros. We get the question enough that we decided to share our own scenario analysis for DPI and waterfall calculations at 20%, 25%, and 30%+ carried interest scenarios. Teasing here with a visual and more on that below!
In Case You Missed It: Tuesday’s Post Recap
Earlier this week…
#218 Size Matters: Small vs. Big VC (5x+ vs. 2x+), Lightspeed Returns Detail
Sheel Mohnot highlighted a key challenge for large VC funds: even with breakout hits, it's difficult to return more than 3x on a large fund. From 2006 - 2018, Lightspeed raised 6 VC funds >$480M and only one fund is >3x DPI.
Lightspeed is one of the top brands in venture capital and these funds had massive successes with investments in companies like Mulesoft, AppDynamics, Snap, Glean — each of which returned more than 1x their respective fund!
While firms like Lightspeed generate substantial absolute returns, smaller funds often achieve higher multiples. This aligns with insights from our post #155 Venture Insights & Small VC Fund Outperformance, where we analyzed how small VC funds can deliver outsized returns despite higher volatility.
So Why Does DPI matter?
DPI measures how much capital a fund has actually returned to investors. While TVPI includes unrealized gains, DPI reflects real cash returns, making it a critical metric for LPs evaluating fund performance.
Understanding DPI is key to assessing whether a VC fund is truly delivering—not just on paper, but in real returns.
Diving Deeper: Carried Interest Scenarios & DPI Model
Let’s look at our DPI forecast template:
Now that we’ve sold part of our position and generated proceeds, what comes next?
Now that we’ve sent dollars back to investors and allocated carried interest, let’s dive into how carry scales at different MOIC levels.
This breakdown helps LPs and GPs visualize how profits are allocated under different fund performance scenarios. For a deeper analysis, including access to our model, click below:
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