MOIC, short for Multiple on Invested Capital, is a private-market performance ratio that measures how many dollars an investment has produced for each dollar put in. A 2.0x MOIC means the money doubled; a 3.0x means it tripled. The figure combines cash already returned to the investor with the estimated value of whatever the fund still holds, then divides that total by the capital invested. It is one of the most common performance measures in private equity and venture capital because it answers a plain question in a single number.
The Formula
The calculation is straightforward division:
MOIC = (Realized Value + Unrealized Value) ÷ Total Invested Capital
Each input has a specific meaning:
- Total Invested Capital is the full equity put into the deal, including the original purchase and any follow-on investments or additional capital calls made during the holding period.
- Realized Value is cash already returned. That covers sale proceeds, dividends paid during the hold, and distributions from events like debt recapitalizations, where the portfolio company borrows to pay shareholders without the fund selling its stake.
- Unrealized Value is the estimated fair market value of whatever the fund still owns. Managers arrive at that figure through independent appraisals or internal valuation models built to Accounting Standards Codification (ASC) 820, the authoritative U.S. GAAP standard for fair value measurement.
Adding realized and unrealized value gives the investment’s “Total Value.” Divided by the capital invested, that produces the MOIC.
A Worked Example
Say a private equity fund puts $5 million into a company. Over several years it collects $3 million in cash distributions. An independent appraiser values the remaining stake at $9 million. The calculation runs:
MOIC = ($3,000,000 + $9,000,000) ÷ $5,000,000 = 2.4x
Every dollar invested has produced $2.40 in total value. Only $3 million of that $12 million is cash in hand; the other $9 million is an estimate that has to hold up at sale before the 2.4x is real.
Gross MOIC vs. Net MOIC
A MOIC number without a label is incomplete, because the industry reports two versions:
- Gross MOIC is calculated before management fees, fund expenses, and carried interest are deducted. It reflects raw deal performance and is what fund managers use to judge their own investment picks.
- Net MOIC is calculated after those costs. Distributions in the numerator are net of carried interest, and the residual value reflects accrued fees and carry provisions. This is the number that tracks what an investor actually receives.
The gap between the two matters. Private equity funds have traditionally charged an annual management fee near 2% of committed capital plus 20% carried interest on profits above a preferred return. Over a multi-year hold, those costs meaningfully shrink the investor’s multiple.
Under the SEC’s Marketing Rule, a registered investment adviser that shows gross performance in an advertisement must also show net performance, calculated over the same period, using the same methodology, and displayed with equal prominence.1eCFR. 17 CFR 275.206(4)-1 – Investment Adviser Marketing The rule exists because gross figures can paint a rosier picture than what investors experience after fees. When comparing funds, confirm you are looking at the same version of the number, at similar fund vintages, and at similar strategies.
Why MOIC Alone Can Mislead
MOIC tells you how much an investment grew. It says nothing about how long the growth took. A 3.0x return over three years and a 3.0x return over eight years produce the same MOIC, even though the shorter investment was far more efficient with capital.
Internal Rate of Return (IRR) fills that gap. IRR is the annualized rate of return that accounts for the size and timing of every cash flow. A 3.0x MOIC works out to roughly a 44% IRR over three years but closer to 25% over five. Neither number is complete on its own. A fund can post a high IRR by returning a modest profit quickly, say a 1.3x MOIC in six months, while a fund with a more substantial 2.5x MOIC over seven years shows a lower IRR. Professional investors read both together: MOIC for total wealth created, IRR for the speed of compounding.
A few other cautions travel with the metric. Because unrealized value rests on appraisals and internal models, part of any MOIC that includes an ongoing stake can move, sometimes sharply, before exit. MOIC also carries no risk adjustment: two investments can each hit 2.5x with very different leverage, concentration, and volatility. And it does not translate cleanly to public-market returns, since fee structures, liquidity, and calculation methods differ.
How MOIC Relates to TVPI and DPI
Fund reports usually show MOIC alongside two related multiples. Knowing how they differ prevents confusion.
TVPI (Total Value to Paid-In Capital)
TVPI and MOIC are close cousins and sometimes used interchangeably, but the denominators differ. MOIC divides total value by the equity invested in the deal itself. TVPI divides total value by the full capital called from investors, which includes management fees and fund-level expenses paid alongside investment capital. Because TVPI’s denominator is larger, it produces a slightly lower multiple than gross MOIC on the same fund.
DPI (Distributions to Paid-In Capital)
DPI isolates the realized side by dividing only cash distributions received by paid-in capital. It strips out unrealized value entirely, making it the truest cash-on-cash measure. A fund can show a strong MOIC while its DPI stays low if most of the value is still sitting in unsold investments. Once a fund fully liquidates and distributes everything, DPI and TVPI converge on the same number.
Read together, the three metrics form a hierarchy. MOIC or TVPI shows total value including estimates. DPI shows what has actually been paid out. The gap between them is how much of the story still depends on unrealized valuations.
What Counts as a Good MOIC
Context matters more than any single threshold. A 2.0x MOIC, doubling the money, is a common baseline expectation in traditional private equity buyout funds. Industry analysis has pointed to 2.5x as the target for a typical leveraged buyout over a five-year hold, though hitting that multiple has grown harder as borrowing costs have risen and purchase price multiples have stayed elevated.
Venture capital works differently. Early-stage funds target much higher multiples on individual winners, sometimes 10x or more, because many portfolio companies will return nothing. A venture fund’s overall MOIC of 3.0x can still represent strong performance once losses across the portfolio are absorbed.
Whatever the strategy, a MOIC figure is only as useful as the label attached to it. Confirm whether it is gross or net, whether the fund is early in its life or fully realized, and what type of fund produced it before drawing any conclusion from the multiple alone.