MOIC, the multiple on invested capital, is the simplest performance figure a fund reports: what an investment is worth now, realised and unrealised together, divided by what was invested in it. It ignores time, which is its virtue and its limit, and it is quoted deal by deal as often as for a whole fund. This page defines MOIC, works it on this site's own worksheet figures, sets it beside TVPI and IRR so the three are not confused on a letter, and says where each belongs in a fund's reporting to its limited partners.
The definition, and the worked figure
MOIC is total value over invested capital: distributions plus residual value, divided by the capital actually put into the investment or the fund. On this site's worked example the fund has distributed two million six hundred thousand dollars and holds nine million four hundred and twenty-five thousand of residual value, twelve million twenty-five thousand in total, and if the whole of its six and a half million paid in had been invested its MOIC would be one point eight five times. Quoted on a single deal, the same arithmetic uses that deal's cost and that deal's value, which is how a fund reports a three times on one company and a zero on another.
MOIC versus TVPI: the denominator
TVPI divides by paid-in capital, which includes the fees and expenses investors were called for. MOIC divides by invested capital, the money that went into deals. Since fees are paid in but not invested, MOIC on a fund is always at least as high as its TVPI, and a fund that quotes MOIC where an investor expects TVPI is quoting the larger number. On a letter the two should be labelled, and the ILPA template's multiples are the paid-in ones. The worksheet on this site computes the paid-in multiples; a deal-level MOIC needs that deal's cost, which the investor record does not hold.
MOIC versus IRR: time
MOIC says how many times the money came back; IRR says how fast. A two times MOIC earned in three years and the same two times earned in ten years are the same MOIC and very different IRRs. Neither is complete without the other, which is why a letter reports both: the multiple for how much, the rate for how quickly. A fund early in its life has a MOIC near one and an IRR that means little; a fund late in its life has a MOIC that is mostly realised and an IRR that has settled.
Where MOIC belongs on an LP letter
Deal by deal, in the portfolio section, where each company's cost, value and MOIC show the investor what the fund actually did. At the fund level, beside TVPI with both labelled, so the investor can see the effect of fees. Never alone as the headline, because the headline is the net paid-in multiple the investor can check against their own account. The record on this site computes the fund-level paid-in figures from four inputs; the deal-level MOIC is the portfolio job's output and is reported from there.
Questions people ask about moic
Is MOIC gross or net?
Usually gross, because it is computed on invested capital before fees and often before carry. A net MOIC exists but is rarely what a fund means by the word; when in doubt, the letter should say which.
Can MOIC be below one?
Yes: an investment worth less than its cost has a MOIC below one, and a written-off one has a MOIC of zero. A fund's MOIC is the value-weighted result of all of them.
Does Rapportvo compute deal-level MOIC?
No. It computes the fund-level paid-in multiples from the investor record. Deal-level cost and value belong to the portfolio job, and the letter takes them from there.