If You Don't Have 3x Net DPI, Raising will be a Struggle
A very well-known and respected CIO of a mid-west endowment—someone I deeply respect—starts every conversation the same way:
"Unless you have returned 3x net DPI, I don't want to speak with you."
Not 2.5x. Not "on track for 3x." Not "great paper returns."
3x. Net. DPI. Cash back to LPs.
And this reflects what I'm hearing from LPs right now across the board. The expectations have evolved. A few years ago, 2.5x was respectable. Now, LPs are carefully evaluating whether alternative investments might serve their needs.
The math has to work—and 3x is becoming the floor, not the ceiling.
The reality: most emerging managers don't have 3x DPI yet. Their funds are still maturing. Their exits haven't materialized. And patience is required.
So what do you do?
Option 1: Wait (and Hope)
You can wait for your portfolio to mature. Wait for exits. Wait for liquidity events that may or may not happen on your timeline.
The problem? Momentum is everything in fundraising. If you're waiting 2-3 years for your DPI to catch up, you're losing positioning. You're losing mindshare. You're watching other funds close while you sit on the sidelines.
And by the time you do raise? The market may have moved on. Your story is stale. Your LPs have moved to the next thing.
Option 2: Get Creative with Secondaries
This is what smart GPs are doing right now. They're not waiting. They're creating liquidity.
Secondaries
Sell stakes in your winners to secondary buyers. Yes, you're giving up some upside. But you're crystallizing gains now. You're moving your TVPI into DPI. You're giving LPs actual cash back—which is what they care about when they're deciding whether to re-up.
LPs don't invest in paper returns. They invest in GPs who can actually return capital.
GP-Led Secondaries
If you have one or two real winners in your portfolio—companies that could be 10x+ but aren't ready to exit—consider a GP-led secondary. You create a continuation vehicle, give your existing LPs liquidity, and keep the upside in the best companies.
It's more complex. It requires negotiation. But it solves two problems at once:
Your LPs get their money back (DPI goes up)
You keep the upside on your best assets (and prove you know how to pick winners)
The best part? It signals to the market that you're not just sitting around hoping. You're actively managing your portfolio. You're thinking like a GP who understands that fund performance is about more than just picking great companies—it's about returning capital.
The Real Question
Most GPs I talk to know their DPI is a problem. They just don't want to admit it. They're hoping the market will turn. They're hoping LPs will lower the bar. They're hoping that "story" and "brand" will be enough.
It presents its own challenges.
LPs are looking at their own returns. They're looking at their allocation to venture. And they're asking: who's actually giving me my money back?
If the answer isn't you, they're moving on.
The GPs who are closing their next funds right now aren't necessarily the ones with the best portfolios on paper. They're the ones who figured out how to get cash back to LPs—whether through exits, secondaries, or GP-led deals.
So the question isn't whether you should think about secondaries. It's whether you can afford not to.
