Net IRR
A net-of-fee read on fund performance, expressed as distributions against paid-in capital and framed against the break-even line, rather than a time-annualized rate.
◆ Percentage
Cumulative cash returned to LPs, net of fees & carry
Capital called from LPs to date
Computed — distributions ÷ paid-in capital
Net position vs. paid-in
Awaiting inputs.
Formula
What it measures
How LPs' net-of-fee distributions compare to what they've paid in, visualized as a spread against the 100%-of-paid-in break-even line — the fee-drag lens on fund performance.
Why it matters
LPs want to see performance after everything the GP charges has already come out. This view puts net distributions directly against paid-in capital so the gap — the 'spread' — is immediately visible, without needing to do the division mentally.
How to read it
A net position of 145% (a spread of +45 points) means LPs have received distributions equal to 145% of what they paid in, net of fees and carry. Read the spread, not just the raw percentage: a positive spread means LPs are ahead of break-even; a negative spread ('drag') means they haven't yet recovered their paid-in capital.
What good looks like
Good
Net position tracking meaningfully above the 100%-of-paid-in break-even line and growing.
Watch
Net position flat near the break-even line for an extended period.
Bad
Net position well below break-even with limited unrealized value to bridge the gap.
Watch-outs
- Reading this as a compounded annual rate — it does not account for the timing of cash flows the way a true annualized IRR does.
- Comparing this figure directly to a dated-cash-flow XIRR from another source — the two are not computed the same way.
- Ignoring unrealized value (RPI) when this reading shows a negative spread — a fund can be below break-even on net distributions while still holding meaningful unrealized value.
Worked example
Hypothetical
LPs have paid in $20M and received $29M in net distributions. Net position = $29M ÷ $20M = 145% of paid-in, a spread of +45 points over break-even.
FAQ
Is this the same as a true annualized Net IRR?
Not as currently implemented — this reading is net distributions expressed as a percentage of paid-in capital, without a time or holding-period component. For an annualized figure, see Gross IRR, which does incorporate a holding period.
What does a negative spread mean?
It means net distributions to date are below 100% of paid-in capital — LPs haven't yet received their capital back in cash, net of fees and carry. This is common early in a fund's life and a concern only if it persists well past the fund's typical realization period.
How is this different from Net Multiple?
It's the same underlying ratio (net distributions ÷ paid-in capital), presented as a percentage-point spread against a 100% break-even line instead of as a raw multiple like 1.45x.
Related
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