Multiple on Invested Capital (MOIC): What It Is and How to Calculate It

Angelina Graumann

Venture capital firms need to have a system in place to track the performance of their different investments. Limited partners want to understand how a specific fund is performing — especially when a general partner is raising a new fund.

Multiple on Invested Capital (MOIC) stands out as a critical measure for investors aiming to track their portfolio performance . This article delves into the essence of MOIC, offering a clear guide on how to calculate it and its significance in the venture capital ecosystem.

Related resource: Venture Capital Metrics You Need to Know

What is Multiple on Invested Capital (MOIC)?

In venture capital, MOIC is a crucial metric that measures the return on investment by comparing the current or exit value of an investment to the initial capital invested. It offers a straightforward ratio indicating how many times the original investment has been returned, making it essential for evaluating the financial performance of an investment. MOIC's simplicity allows venture capitalists to assess value creation, compare performance across various investments, and make informed decisions on future investments or exits. As a universal metric, it facilitates direct comparison across diverse portfolios, highlighting the efficiency of startups in generating growth and guiding investors in maximizing their returns.

MOIC Formula

The formula for MOIC is:

MOIC = Current Value of Investment / Total Invested Capital

Each component plays a crucial role:

  • Current Value of Investment: The present market value or exit value of the investment.
  • Total Invested Capital: The initial amount invested.

Unrealized vs. Realized MOIC

Unrealized and realized MOIC are two states of the Multiple on Invested Capital that reflect different stages of an investment's lifecycle in venture capital:

  • Unrealized MOIC refers to the calculation of the multiple based on the current market value of an investment that has not yet been liquidated or exited. It represents a paper value, indicating the potential return on investment if the investment were to be sold at its current valuation. Unrealized MOIC is a snapshot of the investment's performance at a given point in time, offering investors a glimpse into the possible outcome of their venture, assuming the market conditions remain favorable until the actual sale or exit.
  • Realized MOIC, on the other hand, is determined when an investment is actually sold or exited. It calculates the multiple based on the final sale price or exit value, representing the actual return on investment received by the investor. Realized MOIC is concrete, reflecting the tangible outcome of an investment after it has been fully liquidated.

The key difference between these two measures lies in their timing and certainty: unrealized MOIC is speculative, based on current valuations that can fluctuate, while realized MOIC is definitive, based on actual returns received from an investment. Both metrics are valuable for investors to assess and monitor the performance and potential of their investments over time.


MOIC and IRR are both used to evaluate investment performance, but they do so in fundamentally different ways:

  • MOIC measures the total return on an investment as a multiple of the original investment. It's calculated by dividing the current or exit value of an investment by the initial amount invested. MOIC provides a straightforward, time-independent snapshot of investment performance, showing how many times the invested capital has been returned.
  • IRR, on the other hand, calculates the annualized effective compounded return rate of an investment, considering the time value of money. IRR is the rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero. It provides a time-weighted annual return, making it especially useful for comparing investments with different durations.

The primary difference between MOIC and IRR is how they incorporate time:

  • MOIC is a simple multiple, useful for quickly assessing the magnitude of return without considering the investment period.
  • IRR provides a deeper analysis by considering the timing of cash flows, offering a rate of return that accounts for the duration of the investment, making it possible to compare investments on a more nuanced level.

While MOIC offers a clear, immediate measure of how much value an investment has generated, IRR gives insight into the efficiency and timing of returns, accommodating more complex scenarios where the timing of cash inflows and outflows is a crucial factor.

Why MOIC is Important in Venture Capital

MOIC plays a crucial role in evaluating investment performance by providing a clear, direct measure of the financial returns relative to the initial capital invested. It does this by expressing the return as a multiple, showing investors how many times their original investment has been returned in value. This simplicity and directness make MOIC an invaluable tool for quickly assessing the effectiveness of investments in generating financial growth.

MOIC helps investors understand the value generated from their investments by offering a straightforward metric that reflects the total increase in value of an investment, without the complexity of accounting for time or the pattern of cash flows. It enables investors to gauge the overall success and efficiency of their investments in turning the initial capital into a larger sum. By comparing the initial investment to the current or exit value, investors get a clear picture of the investment's performance and its contribution to their financial objectives.

Related resource: VC Fund Performance Metrics 101 (and why they matter to LPs)

Compares Returns Across Investments and Funds

By expressing performance as a multiple, MOIC standardizes the evaluation of investment returns across different startups and VC funds, making comparisons straightforward despite variations in initial investment sizes. This standardization is possible because MOIC calculates returns relative to the invested capital, providing a ratio or multiple that directly reflects how many times the investment value has increased. For instance, an MOIC of 3x indicates that the investment value has tripled, regardless of whether the initial investment was $100,000 or $10 million. This approach abstracts away the absolute dollar amounts and focuses on the proportional return, enabling investors to compare the performance of various investments on an equal footing. MOIC thus serves as a universal metric that simplifies the assessment of financial efficiency and success across the diverse landscape of startup investments and VC fund portfolios, facilitating more informed decision-making processes for investors.

Provides a Benchmark for Success

MOIC serves as a robust benchmark for success by offering a uniform metric that quantifies investment performance as a multiple of the initial capital. This simplicity allows stakeholders to assess and compare the absolute return on investments across various ventures, irrespective of their scale or the amount of capital deployed.

In the competitive landscape of venture capital, where the goal is to maximize returns on investment, MOIC distills the essence of financial success into a single, comprehensible figure. It enables investors to quickly identify high-performing investments and make informed decisions based on the capacity of startups to multiply the initial funds provided.

By setting a clear, quantifiable standard, MOIC helps define what constitutes a successful venture within the industry, guiding both investors and entrepreneurs in their pursuit of exceptional growth and value creation.

Tracks Progress Over Time

MOIC can be calculated at various stages throughout the lifecycle of an investment, offering investors timely insights into its performance and future potential. By comparing the current or exit value of an investment to the original capital invested at different points, investors can track the progression of their investment's value over time.

This dynamic application of MOIC allows stakeholders to monitor growth trends, evaluate the effectiveness of strategic decisions, and adjust their expectations for future returns based on real-time data. Such periodic assessments of MOIC provide a clear, ongoing picture of an investment's health and potential, empowering investors with the information needed to make informed decisions regarding additional investments, exits, or strategic shifts to maximize returns.

How to Calculate MOIC

Calculating MOIC involves a straightforward process, enabling investors to assess the performance of their investments at any point in time. Here’s a step-by-step guide to calculating MOIC, along with an example to clarify the process:

  1. Identify the Total Invested Capital: Determine the total amount of money invested in the venture. This includes all capital contributions made towards the investment.
  2. Determine the Current or Exit Value of the Investment: Assess the current market value of the investment if it has not been sold, or use the exit value if the investment has been liquidated.
  3. Calculate MOIC: Divide the current or exit value of the investment by the total invested capital. The formula is:

MOIC = Current Value of Investment / Total Invested Capital​


Let’s assume you invested $100,000 in a startup. After a few years, the current market value of your investment is $400,000.

  • Total Invested Capital: $100,000
  • Current Value of Investment: $400,000

Using the MOIC formula: MOIC = $400,000 / $100,000 = 4

This means your investment has generated a return four times the original amount invested, indicating a significant increase in value and showcasing the investment's performance.

By calculating MOIC at various points during the investment period, investors can monitor the progression and potential future returns of their investments. This continuous assessment helps in making informed decisions, whether it's about holding onto the investment, considering additional funding, or planning an exit strategy.

What Is a Good MOIC?

A good MOIC (Multiple on Invested Capital) typically indicates that an investment has generated a substantial return relative to the initial capital invested. In venture capital, a MOIC of 3x or higher is often considered good, as it demonstrates that the investment has tripled the original amount invested, reflecting strong value creation and investment performance.

Example of a Good MOIC:

  • If an investor puts $1 million into a startup and later exits the investment for $4 million, the MOIC would be 4x. This is considered a strong performance, as the investor has quadrupled their initial investment.

Conversely, a bad MOIC falls below 1x, indicating that the investment has lost value and the investor receives back less capital than they originally invested.

Example of a Bad MOIC:

  • If an investor invests $1 million in a company, but the investment's value decreases, and they can only exit at $800,000, the MOIC would be 0.8x. This signifies a loss, as only 80% of the initial investment is recovered.

Track Your Fund Performance Data With Visible

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Related resource: The Ultimate Guide to Startup Funding Stages

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