IRR Isn’t Enough Anymore: The New Fund Metrics That Matter in 2024
For decades, IRR has been the star of fund performance metrics. It was clean. It was simple. It worked.
But in 2024 and beyond, IRR alone doesn’t cut it.
Sophisticated LPs want more than one number. They want context, comparability, and transparency. They want to know where the performance is coming from — and how reliable it is. They want to see how the portfolio is moving, what’s been realized, and where the next return is coming from.
Meanwhile, GPs need better internal visibility.
And portfolio companies are demanding more strategic insight than ever.
At TheExtraordinaryLab, we work with fund CFOs and operators across venture capital and private equity to move beyond IRR — and install the infrastructure that drives institutional-grade reporting and credibility.
Here’s what the best fund finance leaders are tracking today — and how it changes the game.
Let’s start with the basics — but do them better.
Gross IRR means very little in a vacuum. LPs want to know exactly how much of that performance actually reaches them, after all fees and carry are deducted.
The solution?
Always report both gross and net IRR — and bridge them.
This includes:
- A clear breakdown of management fees, carry, and expenses
- A visual IRR waterfall showing how gross returns translate into LP net outcomes
- A net-to-LP snapshot that maps performance by share class or investor group
This builds trust and removes ambiguity. The best CFOs present these metrics with clarity, not complexity. It’s not about hiding the fees — it’s about showing LPs the math and proving that value is being delivered.
Many GPs share DPI (Distributions to Paid-In) and call it a day.
But DPI without context tells an incomplete story.
Modern LPs want to see how much of the return is realized versus unrealized, and where the remaining value sits.
What the best CFOs are doing:
- Break out DPI and RV (Residual Value) side by side
- Map the realized exits and how they contributed to DPI
- Show the portfolio company status — active, marked up, written down, or exited
- Include vintage aging analysis — how long value has been sitting on the books
This allows LPs to judge not just performance, but momentum.
It answers the question: Is this fund still climbing, or are we coasting on early wins?
You can’t run a fund in 2024 without understanding what’s actually happening inside your companies.
Today’s fund CFOs are expected to track and report:
- CAC (Customer Acquisition Cost)
- LTV (Lifetime Value)
- Churn rates
- Gross and net margins
- Burn multiples and runway
And not just individually. The most forward-thinking firms are rolling these metrics up at the fund level to spot trends, allocate support, and prioritize follow-on capital.
Why it matters:
- LPs want to see how you’re driving value — not just investing capital
- GPs need to prioritize where to spend reserves or offer hands-on help
- Portfolio companies expect benchmarking and actionable support
This is where finance moves from reporting to enabling. It turns data into direction.
Many LPs have been burned by uneven or unpredictable capital pacing.
They want visibility into what to expect next — not just what has happened.
This means:
- Showing the breakdown of committed vs. deployed vs. reserved capital
- Mapping deployment pacing vs. the original plan
- Providing a 6 to 12 month forecast of expected capital calls and reserve usage
- Justifying reserve strategy across portfolio needs, follow-on potential, and market conditions
This is one of the most underreported but high-trust-building metrics. LPs want to plan their capital allocation across funds. Giving them accurate pacing projections makes your fund easier to work with — and shows operational maturity.
Most funds track cash flow historically.
Few forecast it forward — and that’s a major missed opportunity.
Your fund-level cash flow model should include:
- Projected capital calls and distributions
- Management fees and operating expenses
- Expected fund admin, audit, and legal costs
- Runway and liquidity tracking based on deployment pace
This is not just for LP optics — it helps your internal team operate with clarity. You will know when fees are covered, when runway gets tight, and how to optimize distributions versus reserves.
A forward-looking cash tracker also gives your GP team visibility on when you can launch the next fund — with clean books and strong momentum.
Today’s LPs are more sophisticated, more selective, and more systems-focused.
They want:
- Metrics that go beyond vanity and into operational insight
- Clear reporting that shows how value is being created
- Predictability around capital calls, performance updates, and fund cadence
- Confidence that the fund is not just investing — it is operating like an institution
That confidence is earned not just through returns, but through reporting infrastructure.
We partner with GPs and fund CFOs to install the full finance stack that LPs now expect, including:
- Fund modeling tools for IRR, DPI, NAV, and waterfall tracking
- LP-ready dashboards with real-time visibility
- Capital call and distribution systems
- Portfolio-level operating metric templates and reporting packages
- Fund-level cash flow forecasts and pacing analysis
We also offer plug and play toolkits like our VC and PE Fund CFO Kit — designed to install these systems quickly, without waiting for the next audit cycle or fundraise crunch.
IRR will always matter.
But the firms that win in the next decade are the ones that go beyond it.
They will bring context, visibility, and strategy to their reporting.
They will build credibility not just through returns — but through transparency.
And they will run their funds with the same discipline and structure they expect from their best portfolio companies.
Ready to upgrade your fund finance infrastructure?
Explore our Fund CFO Toolkit at [www.theextraordinarylab.com] or book a diagnostic call to get started.