Returns & Metrics
What is MOIC (Multiple on Invested Capital)?
Quick Answer
MOIC is the ratio of total value returned to total capital invested, regardless of time. A 3x MOIC means investors received 3 times their money back. Top-quartile VC funds target 2.5-3.5x net MOIC.
Detailed Answer
Multiple on Invested Capital (MOIC) is the simplest return metric in venture capital. It measures total value relative to total investment, ignoring the time dimension.
Formula: MOIC = Total Value / Total Invested Capital
Where Total Value = Distributions + Remaining Portfolio Value (NAV)
Example: A fund invests $50M total and generates $150M in returns → MOIC = 3.0x
MOIC benchmarks (net to LPs): - Top decile: >3.5x - Top quartile: 2.5-3.5x - Median: 1.5-2.0x - Bottom quartile: <1.5x
Related multiples: - **TVPI** (Total Value to Paid-In) — Same as MOIC but expressed relative to called capital - **DPI** (Distributions to Paid-In) — Realized returns only (cash back to LPs) - **RVPI** (Residual Value to Paid-In) — Unrealized value still in portfolio
Relationship: TVPI = DPI + RVPI
Why MOIC isn't enough: A 3x return over 3 years (~44% IRR) is very different from 3x over 12 years (~9% IRR). Always look at MOIC alongside IRR to understand both magnitude and speed of returns.
Related Questions
What is IRR (Internal Rate of Return)?
IRR is the annualized return rate that makes the net present value of all cash flows equal to zero, accounting for the timing of investments and distributions. Top-quartile VC funds target 20-30% net IRR.
What is ARR (Annual Recurring Revenue)?
ARR is the annualized value of recurring subscription revenue, calculated as MRR × 12. It's the primary growth metric for SaaS companies, with VCs typically expecting 2-3x year-over-year growth for Series A candidates.
What is burn rate?
Burn rate is the monthly rate at which a startup spends cash beyond its revenue. Gross burn is total monthly spend; net burn is spend minus revenue. Runway = Cash on Hand ÷ Monthly Net Burn Rate.
What is TVPI in venture capital?
TVPI (Total Value to Paid-In) measures the total value of a fund relative to the capital called from LPs. It combines realized returns (distributions) plus unrealized portfolio value (NAV). TVPI = (Distributions + NAV) ÷ Paid-In Capital.
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