Multiple on invested capital (MOIC) is the bluntest instrument in investment measurement: put in $1M, end up with $4M of value, and the MOIC is 4.0x. No time adjustment, no discounting — just the multiple.
Realized vs unrealized
MOIC comes in two flavors that get blended into one number:
- Realized MOIC counts actual cash returned (exits, secondaries, dividends)
- Unrealized MOIC counts the current *marked* value of positions still held — paper gains priced off the latest funding round
A fund claiming 3.5x MOIC where 3.2x is unrealized markups on 2021-vintage rounds is a very different animal from a fund that has distributed 3.5x in cash. The related metrics DPI (distributions to paid-in capital) and TVPI (total value to paid-in) make this split explicit.
MOIC vs IRR
MOIC ignores time; IRR is nothing but time. A 2.0x in two years and a 2.0x in ten years are identical MOICs and wildly different IRRs. Venture investors quote both because each corrects the other's blind spot: IRR can be engineered with timing tricks, while MOIC cannot be faked but says nothing about opportunity cost.
What the math demands of venture portfolios
Venture returns follow a power law. In a typical seed portfolio, roughly half the investments return less than the capital invested, and one or two positions generate most of the fund's value. For a seed fund to return 3x net to its LPs, its winners usually need individual MOICs of 20x–100x — which is why serious early-stage investors pass on companies with comfortable 3x ceilings and chase uncomfortable 50x possibilities.
For angels
Angels should track MOIC per company and across the portfolio, valuing each position at the most recent priced round (or lower, if reality suggests). The honest habit is separating cash-on-cash returns from paper: paper MOIC pays no bills, and the average time from angel check to liquidity still runs seven to ten years.