Resources / Glossary / Paid-in capital

Paid-in capital.

Aka. Contributed capital · Drawn capital · Called capital
All terms

What is paid-in capital?

Paid-in capital is the cumulative amount of money a limited partner has actually contributed to a fund, drawn down through capital calls over the investment period. It is the real cash at work — distinct from the commitment, which is the maximum the LP has agreed to provide but may not yet have funded.

The distinction is the whole point. An LP that commits 50 million has promised 50 million; until the GP calls it, the paid-in capital is far lower. Funds draw capital gradually as deals close, so paid-in capital ramps up over the first several years and rarely reaches the full commitment, because fees and undrawn reserves consume part of it.

Paid-in capital is the denominator that makes the core performance multiples comparable. DPI, RVPI, and TVPI all divide value by paid-in capital — they answer the question "per dollar I actually put in, how am I doing?"

How paid-in capital fits the return multiples

The standard private-markets multiples are all ratios over paid-in capital.

  1. DPI — distributions to paid-in. Cash returned divided by paid-in capital. The realized money-back multiple.
  2. RVPI — residual value to paid-in. Current value of unrealized holdings divided by paid-in capital. The paper, still-at-risk multiple.
  3. TVPI — total value to paid-in. DPI plus RVPI. Total realized and unrealized value per dollar contributed.

Because all three share the same denominator, paid-in capital is the figure that has to be tracked precisely. A miscount of what has actually been drawn distorts every multiple at once.

Paid-in versus committed and the PIC ratio

The ratio of paid-in capital to total commitments — sometimes called the PIC ratio or the drawdown rate — measures how far a fund has deployed. Early in life it is low; a fully invested fund approaches but seldom hits 100%, because management fees are drawn against commitments and some capital is held in reserve for follow-ons. Recycling provisions complicate the count: when a fund reinvests early proceeds, paid-in capital can effectively exceed committed capital, which is why the precise definition in the LPA matters when reconciling the number.

Frequently asked.

5 questions
01 What is the difference between paid-in capital and committed capital?

Committed capital is the maximum an LP has agreed to provide over the fund's life. Paid-in capital is the portion the GP has actually called and the LP has actually wired. Commitment is a promise; paid-in is cash on the table.

02 Can paid-in capital exceed committed capital?

Yes, under a recycling provision. If a fund returns early proceeds and then recalls them for new investments, cumulative paid-in capital can rise above the headline commitment. The LPA defines how recycling counts toward paid-in, which is why the exact wording matters when reconciling the figure.

03 Why does paid-in capital matter for return metrics?

Because DPI, RVPI, and TVPI all use it as the denominator. They express value per dollar actually contributed, so an accurate paid-in figure is essential — an error in it distorts all three multiples simultaneously.

04 Does paid-in capital include management fees?

Generally yes. Capital called to pay management fees is part of paid-in capital, which is one reason a fund's invested-in-deals amount is lower than its total paid-in capital. The fee drag is built into the denominator, which is part of why net multiples are lower than gross.

05 How do firms keep paid-in capital accurate across many LPs?

By reconciling every capital call notice and wire against each LP's commitment, call by call, over the fund's life. Keeping that contribution history organized and queryable — rather than scattered across notices and spreadsheets — is what lets a GP report consistent multiples and answer an LP's reconciliation question on demand.

Related terms

Rfund economics

Recycling provision

An LPA clause letting a fund reinvest early proceeds rather than distribute them — effectively <em>deploying</em> more than the committed capital.

Open
Nfund economics

Net IRR

The internal rate of return an LP actually earns <em>after</em> management fees, carried interest, and fund expenses — the only return figure an investor can spend.

Open
Ffund economics

Fund-of-funds

A fund that invests in other funds rather than directly in companies — offering diversified access at the cost of a <em>second</em> layer of fees.

Open
Jfund economics

J-curve

The shape of a fund's net returns over time — <em>negative early</em> as fees and markdowns bite, then rising as investments mature and distributions arrive.

Open
Cfund economics

Co-investment

A direct investment an LP makes alongside the fund in a single deal — usually with <em>reduced or zero</em> fees and carry, on top of its fund commitment.

Open
Cfund economics

Carried interest

The GP's share of a fund's profits — conventionally 20% — paid only after investors recover their capital and <em>preferred return</em>.

Open
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