What is MOIC? The multiple on invested capital: what a holding or a portfolio is worth, realised and unrealised, divided by what was invested in it. The MOIC meaning is that simple, and what MOIC stands for is exactly those four words; what is MOIC in finance more broadly is the same ratio applied to any investment, and MOIC private equity teams read it as the deal-level multiple, worked on cost before fees, as against the fund-level multiples the LPs are sent. This page is private equity MOIC as the portfolio lead works it, on one holding and across the book, on this site's worked example, and what the figure leaves out.
MOIC meaning, worked on one holding
A $4,000,000 position at 12% ownership of a company marked at $60,000,000 is worth $7,200,000; $7,200,000 over $4,000,000 is a MOIC of 1.8x. Until the holding is sold that is a paper multiple on the fund's own mark, and it moves when the mark does, which is why the portfolio monitoring worksheet works it from the mark as an input rather than asserting a valuation. Sell the position for $7,200,000 and the same 1.8x becomes a realised multiple.
Private equity MOIC on the whole portfolio
$30,000,000 realised on $12,000,000 of cost is 2.5x; $66,000,000 of marks on $42,000,000 is 1.57x; together $96,000,000 on $54,000,000 is 1.78x gross. The private equity portfolio analytics worksheet works all three from the fund's own realised and unrealised figures, and shows them apart, because a 1.78x that is two thirds paper reads differently from one that is two thirds cash.
What MOIC leaves out
Time and fees. A 1.8x in two years and a 1.8x in nine years are the same MOIC and very different outcomes, which is what IRR exists to say; and MOIC is worked on invested cost, before management fees, expenses and carry, so it reads higher than the multiples the LPs are sent on paid-in capital. Those fund-level figures, TVPI and DPI as reported, are the relationship venture's subject at rapportvo.com; this hub works the holdings' multiple.
What MOIC private equity teams actually use it for
Ranking the holdings, sizing the follow-on, and telling the partners which positions carry the fund. A portfolio where two holdings at 4x sit beside ten at 0.6x has the same gross MOIC as a flat 1.5x book and a completely different story, and the loss ratio and concentration figures on the analytics worksheet are the two numbers that tell it. Every figure on this page is the worked example's, from inputs the fund owns.
MOIC and IRR on the same holding, side by side
The worked example's holding was bought for $4,000,000 and is marked at $7,200,000: 1.8x. If that mark were realised two years after the investment the annualised return would be about 34%; if it took nine years it would be about 7%. Same MOIC, same cash, a different fund. IRR is the figure that carries the time, and it is the one the LPs' reporting leads with; MOIC is the one the portfolio lead ranks holdings by, because it does not depend on a date nobody has yet and it does not move when a distribution is delayed by a quarter. Read together they say what a holding did and how long it took to do it. Read alone, each hides the other's question.
Gross and net, and why the LPs see a smaller number
The 1.78x on the worked example's book is gross: proceeds and marks over the cost of the holdings, before the fund's management fees, its expenses and the carried interest. The LPs paid in more than the holdings cost, because the fees came out of their capital too, and they will receive less than the holdings return, because carry comes out of the gains. So the multiple they are sent, total value over paid-in capital, is lower than the portfolio lead's gross MOIC on the same holdings, and the gap between the two is the fund's own cost structure. This hub works the gross figure from the holdings; the net figures on paid-in capital are the relationship venture's subject at rapportvo.com, and the two numbers are never the same by construction.
Reading MOIC across a venture book
In a venture portfolio the gross MOIC is made by a few holdings. The worked example's $66,000,000 of marks on $42,000,000 of cost is 1.57x unrealised, and inside it the largest position is $12,000,000 of that value, 18.2%, while $6,000,000 of cost sits marked at $2,400,000. Strip out the top two holdings and the rest of the book reads under 1x; that is normal for the asset class and invisible in the headline figure. The portfolio lead's use of MOIC is therefore not the number itself but its distribution: which holdings sit above 3x, which below 1x, and how much of the cost is in each band. The analytics worksheet prints the concentration and the loss ratio beside the multiples for exactly that reading.
The multiple on the day of the sale, and the one in the deck
When the worked example's holding is sold, the $7,200,000 of proceeds fixes the multiple at 1.8x and it never moves again, whatever the buyer does with the company afterwards. The 1.8x in the fund's last quarterly deck was the same number on a different footing: a mark, set under the valuation policy at the last priced round, that the sale happened to confirm. The two agree here because the mark was recent; on a holding marked three years ago they routinely differ by half a turn either way, and that difference, realised against the last mark, is the only test a fund's marking discipline ever gets. The record keeps each quarter's mark as it stood, so when the sale lands the portfolio lead can say what the fund believed and when, rather than what the deck says now.
Other questions people ask
What does MOIC stand for?
Multiple on invested capital: the value of a holding or a portfolio, realised and unrealised, divided by the capital invested in it. 1.8x on the worked example's holding, 1.78x on its portfolio.
What is a good MOIC in private equity?
The worksheets publish no benchmark. The useful reading is the pair: the realised multiple is cash and the unrealised multiple is the fund's marks, and the gross figure hides the difference. The analytics worksheet shows all three.
Is MOIC the same as TVPI?
No. MOIC is worked on invested cost, before fees, at the holding or portfolio level. TVPI is total value over paid-in capital, the LP's view including fees and expenses, and it is the relationship venture's subject at rapportvo.com.
Does MOIC include follow-on investments?
Yes, in the cost. A position bought for $2,000,000 in the seed round and $2,000,000 in the A is a $4,000,000 cost, and its MOIC is worked on the full $4,000,000 against the fund's whole stake at the mark. Working it on the first cheque alone flatters the holding and is the commonest way a MOIC in a deck is wrong.
What is MOIC in finance generally?
The same ratio applied to any investment: what it is worth, realised and unrealised, divided by what was invested in it. Private equity teams read it as the deal-level multiple, worked on cost before fees.