Venture capital has a cash problem. Paper marks recovered, AI megarounds are back — but the money LPs actually get wired back has been stuck at roughly half the historical rate for three straight years. The 2021 vintage, the largest cohort ever raised, has returned about eight cents per dollar committed five years in. This report assembles the full picture: the drought curve by vintage, the distribution rate that broke, the coping machinery LPs built (secondaries, continuation vehicles, NAV loans), and the 2026 thaw signals — every number cited.
≈ $8 back per $100 committed (Carta)
vs a ~26% ten-year average
with a 1.4% median net IRR (Carta, Q1 2026)
nine years in — <20% of those funds past 1x
up from 28% a year earlier (Carta)
a record; +20% over H1 2025 (Evercore)
the discount LPs eat to get out (Jefferies)
on pace to beat 2025's total of 50 (PitchBook)
Even the vintages that should be harvesting have returned a fraction of committed capital. Everything after 2018 is effectively zero.
Source: Carta VC Fund Performance, Q1 2026 (2,500+ funds)
Annual distributions ran ~26% of NAV over the last decade and peaked at 33% in Q3 2021. Since late 2022 they've been stuck around 14-15%, with 2025 clawing back to ~17%.
Source: PitchBook; Allianz Research; industry distribution-yield aggregations
Six years in, 42% of 2020-vintage funds have made any distribution at all — and that's the good news, up from 28% a year earlier.
Source: Carta VC Fund Performance, Q3 2025
When exits stopped producing cash, the market built its own liquidity: GP-led secondary volume (continuation vehicles) more than doubled in two years.
Source: Evercore; Jefferies; William Blair 2026 Secondary Market Report
LP stakes in venture and growth funds trade at just 78% of NAV in the secondary market — the steepest discount of any major private-market strategy except real estate.
Source: Jefferies Global Secondary Market Review, January 2026
DPI — distributions to paid-in capital — is the only fund metric that measures real money wired back to LPs. TVPI counts paper marks; IRR is timing-sensitive; DPI is cash. And for three straight years, the cash didn't come. When the IPO window slammed shut in 2022, average venture hold periods stretched from roughly 4.5 years to over 7, and annual distributions fell from a peak of 33% of NAV in Q3 2021 to roughly 14-15% — about half the ten-year average of ~26%.
I've sat on both sides of this. My own Fund I returned 1.776x DPI at a 73% net IRR — so I know what distributions are supposed to look like, and I know how rare that is right now: historically the average VC fund reaches only ~0.7x DPI by year 8, versus ~1.3x for the average private equity fund. The drought took a structurally slow asset class and froze it.
The mechanics compound. LPs fund new commitments largely out of distributions from old ones. When distributions run at half rate, allocations shrink, re-ups get skipped, and the pain flows downhill to emerging managers — which is exactly the fundraising market GPs have faced since 2023.
TVPI is a claim. DPI is the proof. Three years of missing proof is why every LP meeting now starts with the same question: where's the cash?
Carta's Q1 2026 dataset of 2,500+ funds lays the curve bare. The 2017 vintage — nine years into a ten-year fund life — has a median DPI of just 0.31x. The 2018 vintage sits at 0.15x. Everything younger rounds to zero: the 2019 and 2020 vintages' median DPI is barely above nothing, and fewer than half of those funds have returned any capital at all.
For the 2017 and 2018 vintages, fewer than 20% of funds have crossed 1x DPI — meaning four out of five funds raised eight and nine years ago still haven't returned their LPs' original capital in cash.
Source: Carta VC Fund Performance, Q1 2026
| Vintage | Fund age | Median TVPI | Median DPI | Median net IRR |
|---|---|---|---|---|
| 2016 | ~10 yrs | ~1.8x | below 1x for most | ~12-15% |
| 2017 | ~9 yrs | ~1.7x | 0.31x | ~10-13% |
| 2018 | ~8 yrs | ~1.6x | 0.15x | ~9-12% |
| 2019 | ~7 yrs | ~1.4x | barely above zero | ~6-9% |
| 2020 | ~6 yrs | ~1.3x | near zero (42% have any) | ~4-7% |
| 2021 | ~5 yrs | 1.02x | near zero (90th pct: 0.16x) | 1.4% |
| 2022 | ~4 yrs | 1.02x | near zero | 0.7% |
The 2021-2022 vintages are the largest cohort by capital raised in venture history — and the drought's epicenter. Those funds deployed at the highest entry prices ever recorded, absorbed the 2022 correction (most took 30-50% markdowns from peak), and by Q1 2026 the median 2021 fund had crawled back to exactly 1.02x TVPI with a 1.4% net IRR. The median 2022 fund: 1.02x and 0.7%.
The cash picture is starker. The 2021 vintage's median DPI is effectively zero and its 90th percentile — the best funds of the cohort — is just 0.16x. As a cohort, 2021 funds have returned on the order of 0.08x: eight dollars back for every hundred committed, five years in. Per Carta's Q3 2025 data, only about 25% of 2021 funds had made any distribution at all, up from 14% a year earlier.
This isn't a story about bad funds hiding in a good market. It's the market: a five-year-old cohort holding hundreds of billions in unreturned capital, marked at roughly cost, waiting for an exit channel.
The 2021 vintage is 1.02x on paper and ~0.08x in cash. Five years in, the largest fund cohort in venture history is a promise, not a return.
When the primary exit channels froze, the market built a parallel liquidity system — and in 2026 it's running at record scale. Total secondary volume passed $120 billion in H1 2026 alone, up 20% over H1 2025's record, with William Blair projecting ~$250 billion for the full year and Jefferies seeing a path to ~$300 billion annually. In Q1 2026, the US VC secondary market ran at a $112 billion annualized pace — surpassing the value of public listings for the first time ever.
GP-led continuation vehicles are the fastest-growing piece: volume went from $52B in 2023 to $75B in 2024 to $115B in 2025, and single-asset CVs alone did $34B in H1 2026 — over half of GP-led volume. Projections put CVs at 30-40% of all private-market exits by 2027. NAV loans complete the toolkit, with continuation vehicles themselves accounting for roughly 40% of NAV-lender deal flow.
None of this liquidity is free. LP stakes in venture and growth funds price at just 78% of NAV in the secondary market (Jefferies, January 2026) — a 22-point haircut, the worst of any major strategy except real estate. And critics note the obvious: a distribution manufactured by a CV or NAV loan is not the same as an exit. The company didn't get sold; the clock got reset.
| Channel | Scale | The catch |
|---|---|---|
| LP-led secondaries (selling stakes) | part of $120B+ H1 2026 total volume | venture stakes price at 78% of NAV |
| GP-led continuation vehicles | $115B in 2025, up from $52B in 2023 | resets the clock; conflicted pricing |
| Single-asset CVs | $34B in H1 2026 (>50% of GP-led) | concentrates risk in one name |
| NAV loans | CVs ≈40% of NAV-lender deal flow | leverage on illiquid marks, not liquidity |
| Direct/company secondaries | $112B annualized pace, Q1 2026 (US VC) | concentrated in a few mega-names |
The secondary market is now bigger than the IPO market for venture. That's not a triumph of innovation — it's the exit market admitting it broke.
The drought is not permanent, and 2026 is producing the first genuine thaw signals. The IPO window reopened in earnest: 44 US VC-backed IPOs year-to-date, on pace to beat 2025's total of 50, headlined by SpaceX's record listing; Q2 2026 alone saw 32 companies go public above $1 billion and 24 acquired at or above $1 billion for $113B in quarterly M&A value. Distribution rates ticked up from ~14% of NAV to ~17% in 2025 and are still climbing.
Carta's fund-level data shows the same inflection: 42% of 2020-vintage funds have now made a first distribution, up from 28% a year earlier, and Q1 2026 showed median TVPI rising for nearly every vintage from 2017 through 2024 — the broadest quarterly improvement since the correction began.
The caveat: the thaw is concentrated. AI megacaps and a handful of decacorn listings drive the headline exit value, while the median 2021-vintage portfolio company still has no path to liquidity. If the IPO pipeline and the $250B secondary market hold through 2027, the coming distribution cycle could be one of the largest LP payout waves ever. If either wobbles, the drought curve above just shifts right another year.
Source: Carta VC Fund Performance, Q3 2025
Every figure in this report is drawn from primary published sources: Carta's quarterly VC Fund Performance reports (2,500+ funds on Carta Fund Administration; the Q1 2026 edition is the core vintage dataset), PitchBook and PitchBook-NVCA exit and IPO data, Cambridge Associates index data, Evercore and Jefferies secondary-market reviews, and the William Blair 2026 Secondary Market Report. Mature-vintage medians blend Carta with PitchBook/Cambridge quartile data and should be read as directional; exact quartile cuts vary by provider and reporting quarter. Distribution-rate figures aggregate industry distribution-yield data and vary ±1-2 points by source. Nothing here is investment advice.
This report is free to cite, quote, chart, or republish with attribution (CC BY 4.0). Copy-paste attribution line: "The DPI Drought: The State of VC Fund Returns, Q3 2026 — Trace Cohen, Value Add VC (valueaddvc.com/dpi-drought-report)". For press, data questions, or corrections: t@nyvp.com or @Trace_Cohen on X. If you link it, I'll probably see it.
Venture's paper recovery is real, but the cash is still stuck: half the historical distribution rate, a near-zero-DPI 2021 mega-cohort, and a $120B secondary market doing the exit market's job at a 22% discount.
The DPI drought is the multi-year collapse in cash distributions from VC funds to their LPs. Since late 2022, annual distributions have run at roughly 14-15% of fund NAV versus a ten-year average of about 26% (they peaked at 33% in Q3 2021). The result: the 2021 vintage — the largest fund cohort ever raised — has returned roughly $0.08 per dollar committed five years in, and even the 2017 vintage's median DPI is just 0.31x nine years in, per Carta's Q1 2026 data.
Per Carta's Q1 2026 report covering 2,500+ funds: the 2017 vintage's median DPI is 0.31x, 2018 is 0.15x, and the 2019, 2020, 2021, and 2022 vintages are all effectively at zero. Only 42% of 2020-vintage funds and about 25% of 2021-vintage funds have made any distribution at all. Fewer than 20% of 2017-2018 funds have crossed 1x DPI.
The IPO and M&A exit channels froze in 2022-2024 just as the record 2020-2022 fund cohort needed them. Average hold periods stretched from ~4.5 years to over 7, and companies bought at peak 2021 prices had no exit path at acceptable marks. Paper values (TVPI) recovered — the median 2021 fund is back to 1.02x — but until companies are actually sold or listed, no cash flows to LPs.
Three main ways: selling fund stakes in the secondary market (total secondary volume topped $120B in H1 2026 alone, though venture stakes price at just 78% of NAV), GP-led continuation vehicles ($115B in 2025, up from $52B in 2023), and NAV loans against portfolio value. Each converts illiquidity into cash at a cost — a discount, a reset clock, or leverage — rather than through a true exit.
Early signals say it's thawing: 44 US VC-backed IPOs year-to-date (on pace to beat 2025's 50), distribution rates up from ~14% to ~17% of NAV, and 42% of 2020-vintage funds now past their first distribution, up from 28% a year earlier. But the recovery is concentrated in AI and mega-cap listings — the median 2021-vintage portfolio still has no liquidity path, so most LPs won't feel the thaw until 2027 at the earliest.
Historically the average VC fund reaches only about 0.7x DPI by year 8 (versus ~1.3x for the average PE fund), with 1x+ DPI by the back half of a fund's life the classic marker of a good fund. Today's cohorts are far behind that pace: the median 8-year-old fund (2018 vintage) sits at 0.15x. Benchmark any fund against its own vintage year, not the historical curve.
Compiled and maintained by Trace Cohen · @Trace_Cohen · t@nyvp.com. Free to cite with attribution (CC BY 4.0).