Nakshvik Ventures Fund I reports a TVPI of 2.4x and a DPI of 0.3x in year eight, and most of its NAV sits in three companies last priced in 2021. What is a realistic TVPI, and what will the LPs ask?

A realistic TVPI is about 1.68x, and only 0.3x of it is cash. Haircutting the three 2021 marks by 45% and the rest by 10% cuts NAV from Rs 630 crore to Rs 412.6 crore. Over an assumed five years of average holding that is roughly 11% a year rather than the 19% the reported figure implies. The LPs will ask how the three companies are valued today and when any of the Rs 413 crore will turn into cash.

Think of a friend who says his flat has doubled in value. Until he sells, the doubling is an estimate; the rent he has collected is real. TVPITotal value to paid-in: cash already returned plus the estimated value of what is still held, divided by the money investors put in. adds estimated value to cash, while DPIDistributions to paid-in: only the cash actually returned to investors, divided by the money they put in. counts only the cash. Nakshvik's 2.4x is Rs 90 crore of cash, 0.3x, plus Rs 630 crore of estimates, 2.1x. In year eight of a fund that usually runs about ten years, almost nine tenths of the reported value is still a mark.

Split the NAV into the three 2021 companies, 70% of Rs 630 crore or Rs 441 crore, and the rest, Rs 189 crore. A 45% haircut takes the three to Rs 242.6 crore and a 10% haircut takes the rest to Rs 170.1 crore, so NAV falls by Rs 217.4 crore to Rs 412.6 crore. Add back the Rs 90 crore of cash and divide by Rs 300 crore: TVPI is 1.68x. Why 45%? Rounds priced in 2021 were set when growth companies traded at much higher multiples than later; the haircut is your estimate, and saying so is part of the answer.

Very, because 70% of the NAV sits in three names. At a 30% haircut on the three, TVPI is 1.90x; at 60% it is 1.46x; and it falls to 1.5x if the three are worth 57% less than their 2021 marks. That concentration is the real finding. A fund whose result depends on three companies is a fund whose result is not yet known, whatever number the report prints. A rough annual return makes the gap concrete: if capital was out about five years on average, 2.4x is roughly 19% a year and 1.68x is roughly 11% a year, before fees and carry.

Four questions, each tied to a number. How are the three companies valued today, by what method and with what evidence since 2021? What is each one's cash runway, since a down round would cut the mark further? Which holdings could produce a sale or listing in the next two years, and at what value, because that is when DPI moves? And how much of Fund II's pitch rests on Fund I's 2.4x? A fund of funds weighs DPI heavily at this age because only cash can be recycled into new commitments. The fair conclusion is not that the manager is wrong, but that Fund I's result is still open and Fund II should be judged on the manager's process, its realised exits and its pricing discipline, with the marks treated as a range.