How to Calculate MOIC: A Practical Guide

What is MOIC and Why It Matters

MOIC stands for Multiple on Invested Capital. It’s a simple way to measure how much money an investment generates compared to the amount you originally put in. If you invest $1 and get $2 back, your MOIC is 2x—that’s it. This ratio cuts straight to the core: how efficiently did your money work for you?

Key Uses of MOIC in Investing

Investors look to MOIC to quickly size up potential gains without getting tangled up in complex calculations. It serves as a common yardstick, whether you’re vetting a private equity fund, a growth-stage startup, or a real estate partnership. MOIC makes it possible to compare opportunities side by side and spot investments with the strongest payoff relative to their cost.

Fund managers also use MOIC to communicate results transparently. A clear MOIC indicates how a fund has performed, before or after fees and costs, and lets stakeholders see if targets have been met or missed.

MOIC vs. IRR and TVPI

MOIC isn’t the only metric in the toolbox. IRR (Internal Rate of Return) and TVPI (Total Value to Paid-In) also play crucial roles in investment analysis, but they tell different stories. MOIC ignores time; it simply shows how much your investment has multiplied, not how quickly those returns arrived. In contrast, IRR takes the timing of cash flows into account, giving a time-weighted return. TVPI is similar to MOIC in some ways but is typically used for funds and includes both distributed and remaining value.

In practice, a quick glance at MOIC might suggest two investments are equally attractive, but IRR could reveal a meaningful difference depending on when results were achieved. This is why savvy investors often look at a combination of these metrics.

With a firm handle on what MOIC represents and how it fits alongside other metrics, it’s time to dig into the nitty-gritty of exactly how MOIC is calculated and the variations that matter when making comparisons.

MOIC Formula Explained

Gross MOIC vs. Net MOIC

MOIC, or Multiple on Invested Capital, comes in two main flavors: gross and net. Gross MOIC reflects the total value generated by an investment before fees, carried interest, or expenses are deducted. It’s a simple snapshot of how much an investment has grown relative to the initial outlay, without considering management costs. Net MOIC adjusts for all those factors, giving you a more accurate picture of what actually lands in an investor’s pocket. Typically, investors and fund managers discuss both figures: gross for high-level performance, net for real-world return after costs.

Single Asset vs. Portfolio Calculations

Calculating MOIC is straightforward for a single asset. Take the current value of the investment—including any cash that has been returned—and divide that by the original invested amount.

For portfolios, things get a bit more interesting. You must account for both realized returns (cash or stock already distributed) and unrealized value (assets still held). The formula becomes:

So, MOIC for a portfolio = (Realized Value + Unrealized Value) ÷ Total Investment Amount. This approach helps investors capture a complete, up-to-date view of how much their invested capital has multiplied across all holdings, not just what’s been cashed out.

Now that you know how the MOIC formula adapts to different investment scenarios, let’s break it down step-by-step and see it in action with real-world numbers and simple calculations.

Step-by-Step: How to Calculate MOIC

MOIC Calculation Example

Calculating MOIC, or Multiple on Invested Capital, is straightforward. Start by identifying two numbers: your total value at exit (including both realized and unrealized value), and your invested capital—the original amount you put in. The MOIC formula is:

MOIC = Total Value ÷ Invested Capital

Take this formula in practice: If you invested $500,000 in a start-up and, five years later, your shares are now worth $1,250,000 (either because of a sale or a recent valuation), your MOIC would be:

MOIC = $1,250,000 ÷ $500,000 = 2.5x

This means your investment has grown by 2.5 times—or for every dollar put in, you now have $2.50.

Using Excel or Google Sheets

Spreadsheet programs are perfect for running MOIC calculations, especially when handling multiple investments or tracking changes over time. In Excel or Google Sheets, type your total value in one cell (say, A1) and your invested capital in another (B1). In a third cell, enter =A1/B1 to instantly get the MOIC. This quick formula lets you run what-if scenarios easily, comparing various possible outcomes and visualizing returns for individual assets or across a portfolio.

Once you’re comfortable calculating MOIC, you’ll be better equipped to interpret what the number actually tells you about your investment and how it compares to industry expectations. Let’s look at how to put your results in perspective and what to watch out for in the next section.

Interpreting MOIC Results

What is Considered a Good MOIC?

Context shapes what counts as a “good” MOIC. In most private equity investments, an MOIC of 2.0x or above is generally regarded as strong—this means you’ve doubled your original investment. However, the bar differs across industries, deal sizes, and risk profiles. For safer, established assets, a lower MOIC may be acceptable if paired with low risk and consistency. In riskier sectors, like early stage venture capital, higher MOIC values are expected to offset the potential for big losses elsewhere. Always compare your MOIC not only to your initial targets, but also to market benchmarks for similar deals.

Limitations of MOIC

MOIC shows you how much value has been generated per dollar invested, but it doesn’t incorporate the time element. For example, turning $1M into $2M over ten years isn’t as compelling as doing so in two. That’s where metrics like IRR come in—they factor in timing. MOIC also ignores fees and carry unless you calculate using net figures. Comparing MOIC across investments only works if you recognize these potential blind spots, especially when the cash flows, holding periods, and realized vs. unrealized gains differ between deals.

Understanding MOIC’s strengths and limits gives you a sharper lens for evaluating investments. Next, let’s separate realized returns from future expectations to see how MOIC works in both scenarios.

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Ready to see how distinguishing between realized and unrealized returns can change the way you assess an investment’s true performance? Let’s break it down next.

Realized vs. Unrealized MOIC

Understanding the difference between realized and unrealized MOIC is essential for tracking investment performance as it evolves. Both figures sit at the heart of private markets analysis, yet they tell distinctly different stories about your capital’s journey.

Realized MOIC represents gains already secured—the cash or shares an investor actually receives after an investment is exited or partially sold. Once distributions hit your account, that portion of the MOIC becomes fact, not projection.

Unrealized MOIC, on the other hand, is tied to investments that remain on the books. It measures the estimated value of currently held assets based on today’s fair market value, not cash returned. Because market conditions can change, unrealized MOIC fluctuates until an actual exit or liquidity event locks in the outcome.

Here’s why separating the two matters: Realized MOIC shows wins already banked, while unrealized MOIC offers a snapshot of current paper gains or losses. Relying on only one overlooks valuable context—case in point, a strong unrealized MOIC can vanish if valuations soften, but realized MOIC is history.

Investment reports often show both types alongside a combined “Total MOIC,” giving clarity on what’s locked in and what’s still at risk. Combining both metrics offers a fuller picture of whether your investments are truly performing, or simply look promising on paper.

After clarifying these differences, the next step is to see how MOIC distinctions play out in practical case scenarios, drawing sharper lines between theoretical and real-world investment outcomes.

MOIC in Context: Case Scenarios

Private Equity Example

Imagine a private equity fund invests $10 million into a manufacturing company. After five years, the fund sells its entire stake for $30 million. To find the MOIC, you divide the exit value by the original investment: $30 million ÷ $10 million = 3.0x. This tells you the fund tripled its money. MOIC lets fund managers quickly see the return on investment, ignoring complex factors like the timing of cash flows or interim dividends.

Venture Capital Example

A venture capital firm invests $2 million across several rounds in a tech startup. A few years later, the company is acquired, and the VC receives $6 million as its total return. The MOIC is $6 million ÷ $2 million = 3.0x. Unlike IRR, MOIC doesn’t care if the investment was held for two years or ten. Instead, it focuses solely on the multiple of capital returned.

Looking at MOIC through real examples brings its practical value into focus. Next, we’ll look at how you can monitor MOIC as your investments evolve, ensuring you don’t miss out on key performance insights over time.

Tips for Tracking MOIC Over Time

Benchmarking Against Industry Averages

Comparing your MOIC to industry benchmarks gives context, helping spot outperformance or red flags faster. For each asset or portfolio, grab recent reports or datasets relevant to your sector and stage. When standard benchmarks shift—like in downturns or high-growth years—adjust your targets rather than coasting on outdated figures. Over time, this habit exposes trends and sharpens your perspective on what’s genuinely remarkable versus average.

Integrating MOIC With Portfolio Metrics

MOIC is more meaningful when layered with other numbers, like holding period or realized IRR. Build a dashboard that automatically updates MOIC alongside cash flow, DPI (Distributed to Paid In), and unrealized value. This way, you spot when impressive MOIC masks stagnant assets or when healthy DPI signals timely exits. Also, track key events—follow-on rounds, partial exits—so recalculations reflect reality, not guesses.

Understanding MOIC across timeframes and metrics ensures that your assessments don’t happen in isolation. Next, let’s see how MOIC plays out in practical scenarios across different investment types.