Paid-in capital (PIC) is the amount investors have actually contributed to a fund — capital called and funded, as distinct from capital merely committed. It is the denominator of the private-markets multiple family: DPI, RVPI, and TVPI all measure value against paid-in capital.
What counts, and why the denominator matters
In drawdown funds, commitments convert to paid-in capital through capital calls over the investment period; the PIC ratio (paid-in ÷ committed) tracks deployment — a fund 60% called is 0.6x PIC. Paid-in typically includes capital called for management fees and expenses, not just investments (a detail that matters when reconciling gross and net figures), and recallable distributions complicate the ledger: some early returns of capital can be called again, temporarily reducing net paid-in in ways that flatter multiples if unnoticed.
The reason a bookkeeping term earns a glossary page: every headline fund metric stands on it. DPI is distributions ÷ PIC; RVPI is residual value ÷ PIC; their sum, TVPI (a.k.a. MOIC), inherits whatever the denominator does. Subscription lines interact here too — by delaying calls, they keep paid-in low early in a fund’s life, which is exactly the mechanism that inflates early IRRs and makes young-fund metrics gentle reading. When comparing funds, confirming that multiples are computed on the same paid-in convention (fees in or out, recallables netted or not, fund-level or investor-level) prevents the apples-to-oranges errors sponsor materials don’t always prevent for you.
One disambiguation worth a sentence: in corporate accounting, “paid-in capital” means the equity shareholders contributed to a company (par value plus additional paid-in capital on the balance sheet) — same words, adjacent concept, different context. Fund documents and this glossary use the private-markets sense.
FAQ
What is paid-in capital in simple terms?
The money you’ve actually sent the fund so far — called and funded — as opposed to the larger amount you committed at subscription.
Why does paid-in capital matter?
It’s the base of every fund multiple: DPI, RVPI, and TVPI all divide by it, so what’s counted in the denominator shapes every performance number you read.
Is paid-in capital the same as committed capital?
No — committed is the pledge; paid-in is the portion actually called and contributed. The gap between them is the investor’s remaining unfunded commitment.
Related terms
Committed vs. Uncalled Capital · DPI · RVPI · MOIC · Capital Call
Educational content only; not investment, tax, or legal advice. Consult qualified professionals regarding your specific circumstances.
