Glossary

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Ratchets

A structure whereby the eventual equity allocations between the groups of shareholders depend on either the future performance of the company or the rate of return achieved by the venture capital firm. This allows management shareholders to increase their stake if the company performs particularly well.

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Realisation ratios: DPI, RVPI, TVPI

DPI: Distribution to Paid-In ratio (a realization ratio). The DPI measures the ratio of distributions to the limited partners compared to the amount of capital contributed by the limited partners.RVPI: Residual Value to Paid-In ratio (a realization ratio). The RVPI measures the net asset value of the funds (unrealized gains), compared to the amount of capital contributed by the limited partners.TVPI: Total Value to Paid-In ratio (a realization ratio). The TVPI is simply the DPI and RVPI added together.A drawback of these ratios is that they do not take into account the time value of money, but are simply based on actual capital figures. For this reason, we recommend that they be used in conjunction with the IRRs.

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Refinancing

The purchase of the venture capital investors' or others' shareholdings by another investment institution.

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Repurchase

The repurchase of the venture capital investors' shares by the company and/or its management.

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Road show

The marketing of a venture capital fund or public offering to potential investors.

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Roll-up

See consolidation.

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RVPI

See realisation ratios.