DPI Trends in Early-Stage Israeli VC

Distributions to Paid-In Capital (DPI) is one of the most critical metrics for LPs evaluating VC performance. In the Israeli early-stage ecosystem, DPI trends reveal both strengths and challenges.

DPI Lag at Early Stages

Early-stage funds often show weaker DPI in the first 5–7 years due to the time required for startups to mature. Israeli funds are no exception, with many strong paper gains (TVPI) but limited realized exits early on.

Improving Liquidity through Secondary Markets

One notable trend in Israel is the rise of secondary sales, where early investors and founders sell stakes to late-stage funds. This has provided earlier DPI events for LPs, even before IPOs or acquisitions.

The Role of Mega Exits

DPI in Israeli VC is still heavily influenced by large exits such as Wix, Mobileye, and ironSource. Funds with exposure to these outliers have significantly outperformed peers. The next wave—likely in AI and cybersecurity—will determine DPI performance over the next five years.

Institutional Investor Involvement

As Israeli VC matures, more institutional investors are demanding stronger DPI outcomes. This pressure is driving GPs to balance long-term growth with earlier distributions, often via structured exits.

While early-stage Israeli funds may take time to deliver DPI, trends point toward improving liquidity, disciplined fund management, and maturing portfolio companies. For LPs, the key is patience combined with careful fund selection—positioning them to benefit from Israel’s next generation of global exits.