MOIC (Multiple on Invested Capital)

MOIC is the simplest venture return metric: total value (realized plus unrealized) divided by capital invested. A 3x MOIC means the investment is worth three times what was put in, whether that happened in two years or ten — unlike IRR, MOIC ignores the time value of money entirely.

MOIC is useful precisely because it's simple and hard to distort with timing tricks, which is why LPs often use it alongside IRR to sanity-check a fund's headline return story. At the fund level, MOIC is essentially the same concept as TVPI, just expressed slightly differently depending on whether unrealized value is included.

MOIC is the language of fund math. Venture funds need a small number of positions returning 10x or more to return the fund, because most investments return less than 1x. When an investor says they need to believe your company can be a '10x,' they're talking about MOIC on their invested dollars — not your revenue growth.

Deal-level and fund-level MOIC are different animals. One 50x deal in a 30-company portfolio doesn't make a 50x fund; fund-level MOIC blends winners and losers. Deal multiples are also usually quoted gross, before fees and carry, while LP benchmarks are net — so comparing a GP's best deal MOIC to a fund benchmark compares two different things.

MOIC and IRR fail in opposite directions. IRR overstates fast, modest wins; MOIC understates the value of getting money back quickly, since a dollar returned in year three can be redeployed while MOIC treats it the same as a dollar returned in year ten. A 3x MOIC over twelve years is a mediocre annualized return; the same 3x over three years is outstanding.