How to Calculate MOIC: Multiple on Invested Capital Explained

MOIC — Multiple on Invested Capital — answers the most basic question in venture investing: how many times did you multiply your money? If you put in $1M and got back $5M, your MOIC is 5x.

It's the simplest return metric in VC. Unlike IRR, it doesn't account for time. Unlike NPV, it doesn't require a discount rate. It's a pure ratio: what came out divided by what went in.

What Is MOIC?

MOIC measures the total value returned (or projected to be returned) as a multiple of the capital originally invested. It's reported at both the deal level (how did this individual investment perform?) and the fund level (how did the overall fund perform?).

The MOIC Formula, Written Out

MOIC = (realized value + unrealized value) ÷ invested capital. Realized value is cash already returned — exit proceeds, secondary sales, dividends. Unrealized value is the current mark on whatever you still hold. Invested capital is the total cost basis, including follow-ons. That's the entire formula; everything else is being careful about what goes in each bucket.

Worked Example: Deal-Level MOIC

You invest $2,000,000 across a seed check and one follow-on. The company is acquired; your stake pays out $5,000,000 in cash, and you also received $1,000,000 earlier from a partial secondary sale.

1. Realized value: $5,000,000 + $1,000,000 = $6,000,000.
2. Unrealized value: $0 — the position is fully exited.
3. MOIC: $6,000,000 ÷ $2,000,000 = 3.0x.

On a live position the same math uses the current mark: $2,000,000 invested, stake marked at $6,000,000 in the latest round, MOIC = 3.0x — but two-thirds of that multiple is paper until an exit converts it to cash. Always note whether a quoted MOIC is realized, unrealized, or blended.

Worked Example: Fund-Level MOIC

A fund has deployed $80,000,000 into its portfolio. Cumulative distributions to date are $120,000,000 and the remaining holdings are marked at $120,000,000. Fund-level MOIC = ($120M + $120M) ÷ $80M = 3.0x. Note the denominator is capital actually invested in companies, not the fund's committed size — that distinction is exactly where gross and net diverge.

Gross vs. Net MOIC: The Fee and Carry Drag, Worked Precisely

Gross MOIC measures what the portfolio did. Net MOIC measures what the LP actually receives after management fees and carried interest. The gap is structural, and you can compute it exactly.

1. Fund size: $100,000,000 committed. Management fee 2% per year for 10 years = $20,000,000, leaving $80,000,000 investable.
2. The portfolio turns that $80,000,000 into $240,000,000 — a gross MOIC of 3.0x.
3. Profit over committed capital: $240,000,000 − $100,000,000 = $140,000,000. Carried interest at 20% = $28,000,000.
4. LPs receive $240,000,000 − $28,000,000 = $212,000,000 on $100,000,000 committed: net MOIC = 2.12x.

So a 3.0x gross fund is roughly a 2.1x net fund under standard 2-and-20 terms — nearly a full turn of the multiple absorbed by fees and carried interest. When a GP quotes a multiple, the first question is always: gross or net? The second: realized or marked?

MOIC vs. TVPI vs. IRR

The three metrics answer different questions and use different denominators. TVPI — total value to paid-in — divides (distributions + NAV) by capital paid in by LPs, so it is effectively a net-of-fees multiple from the LP's seat. MOIC, in its strict form, divides portfolio value by capital invested in companies, ignoring the fee load. The two converge in casual usage, but on the same fund the strict MOIC will read higher than TVPI because its denominator excludes fees.

IRR adds the dimension MOIC deliberately ignores: time. The relationship is MOIC = (1 + IRR)^t for a single cash flow held t years. A 3.0x outcome in 3 years is a 44.2% IRR (because 3^(1/3) ≈ 1.442); the same 3.0x over 6 years is a 20.1% IRR (3^(1/6) ≈ 1.201). Identical multiple, wildly different annualized returns. That is why sophisticated LPs read the two together — MOIC for magnitude, IRR for speed — and why neither alone can be gamed comfortably. The full comparison, including when each metric misleads, is in our IRR vs. MOIC guide.

How to Achieve 3x MOIC at the Fund Level: The Power-Law Math

A 3x gross fund is not built by every deal returning 3x. Venture outcomes follow a power law: most positions round to zero or one, and a small number of outliers carry the fund. Sketch the arithmetic with a stylized portfolio:

• Suppose 50% of invested capital goes to companies that ultimately return 0x — contribution: 0.00x of the fund.
• Suppose 25% of capital returns 1x — contribution: 0.25x of the fund.
• For the fund to reach 3.0x gross, the remaining 25% of capital must produce 3.00 − 0.25 = 2.75x of the fund — which is 2.75 ÷ 0.25 = 11x on its own capital.

That is the discipline hiding inside "3x fund": a quarter of your dollars must average an 11x. In practice it's usually even more concentrated — one or two positions inside that winning quartile doing 20–50x while the rest do respectable single-digit multiples. Three consequences follow for anyone underwriting deals:

1. Every check must credibly be able to return a meaningful piece of the fund. If the best plausible outcome on a deal is 3x, it cannot pay for the failures. Fund math, not optimism, sets the bar.
2. Ownership matters as much as picking. A 30x outcome only moves the fund if you own enough of it at exit — which is why dilution management and pro-rata follow-ons are portfolio-construction decisions, not afterthoughts.
3. Reserves compete with new positions. Every follow-on dollar raises invested capital — the MOIC denominator — so concentrating reserves into emerging winners is how the same portfolio produces a higher multiple.

MOIC is the simplest metric in venture, and that is precisely its value: it strips away timing, discounting, and presentation, and asks the only question LPs ultimately care about — how many times did the money multiply? Compute it in gross and net, realized and unrealized, and most of the fog around fund performance clears.