VC Fund IRR Trends 2024-2025: Why Top Quartile Now Requires 22%+ Net IRR

22%+ net IRR is the 2025 top-quartile bar for VC funds, per PitchBook's Q3 2025 benchmarks with preliminary Q4 data — down from 27%+ for 2018-vintage funds. That's the short answer. The longer answer is that hitting even this lower bar has gotten harder, not easier.

The top-quartile IRR threshold has come down because the whole market compressed after the 2021 peak, not because funds are performing better against a fixed bar. Meanwhile DPI — the metric that measures actual cash back to LPs rather than paper marks — has kept sliding, which is the real story behind the 2024-2025 performance trend. We track these benchmarks continuously on our VC fund performance dashboard.

Venture Capital IRR Performance Trends 2024-2025: What the Data Shows

Venture capital IRR performance trends for 2024-2025 show a top-quartile net IRR bar of roughly 22%, down from 27%+ for 2018-vintage funds and 25%+ for 2019-vintage funds, per PitchBook benchmark data. The decline reflects broader market compression after the 2021 valuation peak rather than a loosening of what counts as strong performance.

Cambridge Associates' US Venture Capital Index shows a 25-year pooled net return of roughly 12-15% annualized through 2023 — useful context for how far above the long-run average even a "compressed" 22% top-quartile threshold still sits. The median fund, by contrast, is generating net IRR in the high single digits to low teens across recent vintages, which means the spread between median and top quartile has stayed wide even as the absolute bar moved down.

Why Reaching Top Quartile Has Gotten Harder in 2025

The top-quartile net IRR threshold falling from 27% to 22% sounds like the bar got lower, and technically it did. But reaching that lower bar with real, distributable returns has gotten harder, because industry-wide DPI at year eight has fallen from an average of 1.3x in the 2010s to roughly 0.7x today. IRR can still look reasonable on paper because the calculation includes unrealized marks, but with IPO and M&A activity slower to return capital, an increasing share of that IRR is unrealized rather than cash-in-hand.

As of Q4 2023 data, top-quartile funds carried a median DPI of only about 1.5x, and that figure has not meaningfully accelerated since. Most 2021-vintage funds have taken 30-50% markdowns from their peak marks, with median TVPI stabilizing around 1.1x and bottom-quartile funds sitting closer to 0.6x. A fund can clear the 22% IRR bar on paper and still be years away from returning meaningful DPI to LPs — which is exactly the disconnect LPs are pressing GPs on in 2025-2026 fund reviews.

Venture Capital IRR Performance Trends 2024-2025 by Vintage Year

Figures are 2025-2026 estimates blended from PitchBook Benchmarks (Q3 2025 with preliminary Q4 2025 data) and Cambridge Associates US Venture Capital Index reporting. Dashes indicate the specific metric was not independently reported for that vintage in the cited benchmark cut.

DPI Is the Metric Actually Telling the Story

IRR and TVPI are both partly built on unrealized marks, which is why DPI has become the metric LPs scrutinize hardest in 2025-2026 fund reviews. Industry-wide, average VC fund DPI at year eight has fallen from roughly 1.3x in the 2010s to about 0.7x today — nearly half. That decline tracks almost exactly with the slowdown in IPO and M&A exit activity that has kept capital locked inside portfolios rather than flowing back to LPs.

Even top-quartile funds aren't immune: as of Q4 2023 data, the median DPI among top-quartile funds was only about 1.5x, which is a modest multiple for funds otherwise clearing 22-27% net IRR marks. The gap between a fund's IRR and its DPI is effectively a measure of how much of its reported performance is still a promise rather than cash — and that gap has widened across nearly every recent vintage.

This is also why comparing a 2018-vintage fund's DPI to a 2022-vintage fund's DPI at face value is misleading — the 2018 fund has had eight years to exit positions through IPOs and M&A, while the 2022 fund is still mostly holding paper. The more useful comparison is DPI at the same point in a fund's life cycle, which is exactly where the 1.3x-to-0.7x, year-eight-to-year-eight decline becomes meaningful: it isn't an artifact of younger funds dragging down the average, it's a like-for-like slowdown in how quickly capital comes back regardless of vintage.

What the Venture Capital IRR Performance Trends of 2024-2025 Mean for LPs

The dispersion between top-quartile and bottom-quartile VC funds exceeds 30 percentage points in net IRR in most vintage years — a wider spread than buyout, credit, or real estate strategies show, according to Cambridge Associates and PitchBook data. That dispersion is the core argument for manager selection in venture: the median fund materially underperforms the top quartile, and unlike public markets, an LP can't simply buy the index.

LPs evaluating funds in 2024-2025 fundraises are increasingly asking GPs to break down IRR into its realized and unrealized components rather than accepting a single headline number, precisely because the DPI lag has made IRR a noisier signal than it was in the 2010s. Funds that can point to real distributions — not just markups — are having an easier time in a fundraising market where performance benchmarking has become table stakes for any GP conversation with an institutional LP.

How VC Fund IRR Compares to the S&P 500 in 2024-2025

The S&P 500 has returned about 11.5% annualized over the past 40 years and roughly 10.4% over the 30-year period ending December 2025, per Macrotrends and Fidelity data. Against that baseline, even a compressed 22% top-quartile VC net IRR still clears the public-market benchmark by a wide margin — Cambridge Associates puts top-quartile VC IRR over the trailing 25 years at 25%+, or about 2.5x the public market equivalent over the same stretch.

The catch is quartile placement. Top-quartile VC funds have averaged 15-27% annual returns over the past decade against a 9.9% average annual S&P 500 return over the same ten years, but bottom-quartile VC funds have delivered returns in the low single digits — meaningfully worse than simply buying an index fund, and with a decade of illiquidity and 2%+ management fees on top. That's the practical reason the 30-point IRR spread between quartiles matters more in venture than in almost any other asset class: median and bottom-quartile venture exposure is not a reasonable substitute for public equities, even though top-quartile venture clearly is worth the illiquidity premium.

What LPs and Emerging Managers Should Do With This Trend

For LPs building a venture allocation, the 2024-2025 data argues for two things: strict manager selection, given a 30-plus percentage point IRR gap between quartiles, and vintage-year diversification, since 2018-2019 vintages are outperforming 2021-2022 vintages by a wide margin on both TVPI and realized DPI. An LP concentrated entirely in 2021-vintage commitments is sitting on materially different marks than one spread across 2017-2022, even if both picked comparably skilled managers, simply because entry valuations differed so much across those years.

For emerging managers raising funds in this window, the practical implication is that IRR alone is no longer a credible pitch. LPs who lived through the 2021-vintage markdown cycle are explicitly asking for DPI history, realized-vs-unrealized breakdowns, and vintage-adjusted comparisons before crediting a headline IRR number — a shift we track in more detail on our fund performance benchmarking dashboard and in our broader look at how ownership discipline is being scrutinized alongside returns in 2026 fund diligence.