Key Takeaways
- • Median net Total Value to Paid-In (TVPI) capital rose for nearly all tracked venture fund vintages in Q1 2026, signaling a significant rebound after earlier declines observed approximately three years prior, particularly affecting the 2018 cohort.
- • Carta's analysis covers 2,775 venture funds closed between 2017 and Q1 2026, representing approximately $119.3 billion in commitments, with data showing consistent TVPI increases over the past six quarters across funds from 2017 to 2024.
- • Rising startup valuations have driven the recovery, boosting unrealized holdings within VC portfolios across all funding stages; however, realized returns remain limited, with median Distributed to Paid-In (DPI) for 2019 and 2020 vintages hovering just above zero.
- • Liquidity remains constrained despite paper gains: fewer than half of funds from 2019 and 2020 have distributed any capital to limited partners, and only a small fraction across all vintages have achieved 1x DPI—the profitability threshold for LP returns.
- • New fundraising activity accompanied the rebound, with $3.9 billion raised across 86 new funds in Q1 2026, though overall investment and deal activity remain well below historical highs.
Summary
Venture capital fund performance demonstrated a notable recovery in the first quarter of 2026, reversing a challenging period that had pressured returns for several years. According to Carta's latest analysis of 2,775 venture funds closed between 2017 and Q1 2026—representing $119.3 billion in total commitments—median net TVPI increased for nearly every recent fund vintage. This marks a meaningful inflection point after TVPI declined for vintages from 2017 to 2020 beginning approximately three years ago, with the 2018 cohort particularly hard hit during that downturn.
The driver of this recovery is straightforward: startup valuations have climbed substantially from levels recorded six quarters prior, generating asset appreciation across early-stage, mid-stage, and late-stage companies. As portfolio company values have risen, so too have the unrealized gains embedded in VC fund holdings. Data shows median TVPI increased consistently over the past six quarters, reflecting renewed confidence among general partners and limited partners as market conditions stabilized and company valuations recovered from depressed levels.
However, this paper gains narrative masks a critical liquidity constraint. While TVPI improvements signal value recovery, realized returns—measured by Distributed to Paid-In (DPI) capital—remain severely limited for most recent funds. Median DPI for 2019 and 2020 vintage funds hovers just above zero, with fewer than half of funds from those years having returned any capital to investors. Even more mature 2017 and 2018 cohorts show only modest distributions, and only a small fraction of funds across all tracked vintages have achieved the 1x DPI threshold—the minimum benchmark at which limited partners begin realizing profits beyond their initial capital commitments. This gap between unrealized appreciation and actual cash distributions underscores the structural challenge facing the venture ecosystem: asset values have recovered, but the conversion of those gains into concrete LP returns remains incomplete.
The fundraising environment has begun responding positively to the performance rebound. In Q1 2026, venture capital fundraising reached $3.9 billion across 86 newly closed funds, reflecting renewed GP appetite for capital deployment. Yet broader market context suggests measured recovery rather than exuberant expansion. Overall venture investment and deal activity remain materially below historical highs, indicating that while the sector has entered a more positive phase after a period of caution, near-term expectations for a return to prior-cycle valuations and activity levels remain subdued among institutional participants.
The driver of this recovery is straightforward: startup valuations have climbed substantially from levels recorded six quarters prior, generating asset appreciation across early-stage, mid-stage, and late-stage companies. As portfolio company values have risen, so too have the unrealized gains embedded in VC fund holdings. Data shows median TVPI increased consistently over the past six quarters, reflecting renewed confidence among general partners and limited partners as market conditions stabilized and company valuations recovered from depressed levels.
However, this paper gains narrative masks a critical liquidity constraint. While TVPI improvements signal value recovery, realized returns—measured by Distributed to Paid-In (DPI) capital—remain severely limited for most recent funds. Median DPI for 2019 and 2020 vintage funds hovers just above zero, with fewer than half of funds from those years having returned any capital to investors. Even more mature 2017 and 2018 cohorts show only modest distributions, and only a small fraction of funds across all tracked vintages have achieved the 1x DPI threshold—the minimum benchmark at which limited partners begin realizing profits beyond their initial capital commitments. This gap between unrealized appreciation and actual cash distributions underscores the structural challenge facing the venture ecosystem: asset values have recovered, but the conversion of those gains into concrete LP returns remains incomplete.
The fundraising environment has begun responding positively to the performance rebound. In Q1 2026, venture capital fundraising reached $3.9 billion across 86 newly closed funds, reflecting renewed GP appetite for capital deployment. Yet broader market context suggests measured recovery rather than exuberant expansion. Overall venture investment and deal activity remain materially below historical highs, indicating that while the sector has entered a more positive phase after a period of caution, near-term expectations for a return to prior-cycle valuations and activity levels remain subdued among institutional participants.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.