VC & PE Glossary
What Is Realized Value?
Updated
Definition
Realized value is cash or stock actually returned to investors from an investment — after a sale, distribution, or secondary — as opposed to unrealized marks on still-private holdings. Fund performance metrics like DPI depend on realized value.
Useful for: Founders, Investors
Realized value is proceeds actually distributed to fund LPs or returned to shareholders from liquidity events — distinct from /glossary/paper-gains on illiquid positions.
How it works
When a portfolio company sells, IPOs, or pays a dividend, the fund converts holdings to cash or transferable stock, pays expenses, then distributes per the LPA waterfall. Realized value accumulates in DPI (distributions to paid-in capital). Unrealized value remains in NAV marks until exit. Secondary sales of fund stakes or company shares also realize value early.
Founders encounter the term in cap-table and investor updates when VCs describe partial secondaries vs holding for IPO. Realization timing affects carry crystallization and LP cash flow.
Why it matters
- Founders: Understand that your high valuation does not realize value for investors until liquidity — shaping pressure near exit windows.
- Investors: GPs marketing TVPI without realized value face skeptical LPs in fundraising.
- LPs: Cash distributions fund pension obligations; paper marks do not pay beneficiaries.
Common mistake
Treating a 409A or last-round mark as realized wealth. Until a transaction closes, value can still move down.
Related ideas
/glossary/paper-gain, DPI, TVPI, and /glossary/liquidity-event.
Related terms
- Liquidity Event — A liquidity event is any transaction that converts private equity into cash or tradable public stock for shareholders — typically an IPO, acquisition, secondary sale, or dividend recap.
- Paper Gain — A paper gain is an unrealized increase in the value of an investment on paper—marked up in a portfolio or cap table but not yet converted to cash through a sale, IPO, or secondary.
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Common questions
Short answers for founders, LPs, and operators