MOIC (Multiple on Invested Capital) | Futureproof
MOIC (Multiple on Invested Capital)
Quick Definition
Total value returned divided by total capital invested, expressing returns as a simple multiple.
What is MOIC?
MOIC tells you how many times over you got your money back. Invest $1M, get $5M back, that's a 5.0x MOIC. It's the simplest, most intuitive way to express investment returns. No time weighting. No discount rates. Just total value divided by total invested.
Why MOIC Matters
VCs live and die by multiples. A 10x MOIC on a deal means the investment returned 10 times the capital. Fund-level MOIC tells LPs the overall return picture. It's the first number anyone asks about.
MOIC is also how carry math works. Fund needs to return 1.0x before GPs earn carry. Everything above that threshold splits between LPs and GPs.
MOIC vs. IRR
MOIC ignores time. A 3x in 2 years and a 3x in 10 years have the same MOIC but wildly different IRRs. Use MOIC for absolute return magnitude. Use IRR for time-adjusted performance.
Smart LPs look at both. A high MOIC with a low IRR means the fund was slow. A moderate MOIC with a high IRR means fast, efficient capital deployment.
Formula
MOIC = Total Value / Total Invested Capital
Total Value includes both realized (distributions) and unrealized (current portfolio value) returns.
Example
VC invests $2M in a Series A.
- Follow-on: $1M in Series B
- Total invested: $3M
- Company exits at valuation giving VC $18M back
MOIC = $18M / $3M = 6.0x
At the fund level:
- $100M fund
- Distributions to date: $150M
- Remaining portfolio value: $80M
- Total value: $230M
Gross MOIC = $230M / $100M = 2.3x
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