Which Key Performance Metrics LP’s Are Really Interested In, According to AI Chatbots

Authored by: Jermain Malcolm, Managing Director
Updated on: October 5, 2023

We Asked

Why are Limited Partners increasingly interested in funds’ Distribution to Paid-In Capital (DPI) metric?

Open AI ChatGPT

It's clear that the Distribution to Paid-In Capital (DPI) metric has gained significant attention among Limited Partners (LPs). DPI, which is calculated as the total distributions returned to LPs divided by the total capital they've contributed, offers a few key insights...

Google Gemini

Limited partners (LPs) are increasingly interested in a fund's Distribution to Paid-In Capital (DPI) metric for a few key reasons:

Gen II Expert Response:

The advancement of artificial intelligence undoubtedly brings profound changes to the accounting industry. While AI has the potential to automate certain routine and repetitive tasks, it lacks the critical thinking, judgment, and human insight required for complex accounting analysis. Thus, rather than replacing accountants, AI technology presents an opportunity for professionals to enhance their capabilities and perform higher-value tasks. Accountants possess unique skills, such as interpreting financial data in the context of specific business environments, advising on strategic decisions, and ensuring regulatory compliance. These essential aspects of accounting require human expertise that AI cannot replicate.

For example, AI can quickly and accurately calculate Distribution to Paid-In Capital (DPI): the ratio of distributed returns to the total capital contributed by LPs. It can also identify that a high DPI indicates that the fund has successfully realized profitable investments, allowing LPs to receive substantial distributions relative to their contributions. However, LPs themselves will be able to best interpret how efficient and profitable a fund's investment strategy is, a fund’s ability to generate generous returns on their investments, and assess the fund's performance in terms of returning capital and achieving liquidity in the context of the specific business environment. Additionally, AI would lack the relationship and understanding of the fund manager's skill in generating returns and effectively managing investments. For these reasons, AI is certainly an incredibly helpful resource, but not a replacement for experienced professionals.