What is Multiple on Invested Capital (MOIC)?
MOIC measures the total return generated by an investment relative to the original capital invested. It’s a straightforward way to understand how much value an investor has received in return for each dollar put into a deal.
The formula is:
MOIC = (Realized + Unrealized Value) / Invested Capital
Commonly used in private equity and venture capital, MOIC is particularly useful for evaluating the effectiveness of long-term, illiquid investments. Unlike metrics like internal rate of return (IRR), MOIC does not account for time, instead focusing solely on magnitude of return.
An MOIC of 2.0x, for example, means the investment has doubled in value. It’s an essential metric for performance comparison across deals, fund managers or asset classes.