What is "Multiple of Invested Capital, aka MOIC"?

In this piece, you learn what a "Multiple of Invested Capital” is, its key elements, and its significance. This article is part of a comprehensive series designed to help you navigate the VC world and its terms and concepts. Whether you're an entrepreneur seeking funding, a student learning about the industry or you’re thinking about becoming an investor, this series is your gateway to VC clarity.
January 29, 2024
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What is "Multiple of Invested Capital, aka MOIC"?

MOIC stands for "Multiple of Invested Capital." It is a financial metric used to measure the performance of an investment by comparing the total amount realized from the investment to the initial amount of capital invested. MOIC is commonly used in the context of private equity, venture capital, and other investment funds.

The formula for calculating MOIC is:

MOIC=Total DistributionsTotal Invested CapitalMOIC=Total Invested CapitalTotal Distributions​

  • Total Distributions: The total amount of money returned to investors, including proceeds from exits, dividends, and other distributions.
  • Total Invested Capital: The total amount of capital that investors initially contributed to the investment.

MOIC values greater than 1 indicate that the investment has generated a positive return, with values higher than 1 representing a multiple of the initial investment. For example, an MOIC of 2 means that investors have received two times their initial investment.

MOIC is a key performance metric for investors, providing insights into the success of an investment in terms of generating returns. It is often used alongside other metrics such as Internal Rate of Return (IRR) to evaluate the overall performance of an investment portfolio.