Finance term
MOIC (Multiple on Invested Capital)
Also known as: Multiple on Invested Capital, money-on-money multiple, investment multiple
Definition
MOIC is the total value returned by an investment divided by the total capital invested — a straightforward multiple (e.g., 3.0x) that shows gross return without regard to timing or time value of money.
Detailed explanation
MOIC = (Realized Proceeds + Unrealized Value) / Total Capital Invested. A private equity fund that invested $10M and returned $35M has a 3.5x MOIC. Unlike IRR, MOIC ignores how long capital was invested — a 3.0x in 2 years is dramatically more valuable than a 3.0x in 10 years, but both display as '3.0x MOIC.' This is why MOIC and IRR are always reported together in VC/PE performance reporting.
The SEC's Regulation D and Rule 506 private placement rules (sec.gov/rules/final/2013/33-9415.htm) govern how MOIC and other return metrics are presented to accredited investors. The CFA Institute's Global Investment Performance Standards (GIPS) — gipsstandards.org — require compliant firms to disclose both time-weighted (TWR) and money-weighted (IRR) returns alongside multiples for private markets. The NVCA (National Venture Capital Association) standardized MOIC/IRR reporting templates (nvca.org) are widely used in LP reporting.
For small business owners considering equity investment from angels or family offices, MOIC sets investor expectations: most early-stage investors target 5-10x MOIC over a 5-7 year horizon to compensate for failure risk across a portfolio. Understanding MOIC helps business owners calibrate valuation expectations and dilution trade-offs during fundraising.
◈ Worked example
- Angel invests $250K. Company sold 5 years later; angel receives $1.25M. MOIC = 5.0x ($1.25M / $250K). IRR depends on timing — if 5 years, IRR ≈ 38%.
- PE fund invests $50M in a business. At exit, LP distributions total $175M. MOIC = 3.5x. If the hold period was 4 years, IRR ≈ 37%; if 8 years, IRR ≈ 17%.
- MOIC 1.0x = break-even (return all capital invested, no gain). MOIC below 1.0x = loss of capital. Most institutional VC funds target gross MOIC of 3.0x+ on the portfolio to net a 2.0x+ after fees.
Common questions
The most-asked questions about MOIC (Multiple on Invested Capital) — answered straightforwardly.
What is the difference between MOIC and IRR? +
MOIC measures total return magnitude (how much did I get back vs. what I put in). IRR measures return velocity (what annualized rate of return accounts for the timing and magnitude of all cash flows). MOIC is easy to calculate and communicate; IRR captures time value of money. A 3x MOIC in 2 years (IRR ~73%) is far superior to a 3x MOIC in 10 years (IRR ~12%).
Is MOIC gross or net of fees? +
When used without a qualifier, MOIC often refers to gross MOIC (before management fees and carried interest). Net MOIC (after all fees) is what LPs actually receive. For fund benchmarking, always clarify whether reported MOIC is gross or net. Cambridge Associates and Preqin typically report net MOIC benchmarks.
Why do investors use MOIC alongside IRR? +
MOIC without IRR can be misleading — a 2x return over 20 years looks the same as a 2x return over 2 years on a multiple basis, but the IRR difference is enormous (~3.5% vs ~41%). Conversely, IRR can be inflated by quick exits on small checks. Reporting both metrics together gives LPs a complete picture of return magnitude and velocity.
Further reading
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