Leveling up on MOIC Analysis

Kauffman Fellows
4 min readJan 23, 2023


Multiple of Invested Capital (MOIC) is arguably the most common performance indicator in venture capital. Along with Internal Rate of Return (IRR), every LP report has a series of “marks” that show the current MOIC on a deal.

MOIC is a common reporting metric because it’s simple to calculate and simple to understand. Anything above 1.0x is a profitable deal, and anything below is a loss. However, MOICs are more than just a reporting metric; they can be a very useful planning metric. Especially for reserve deployment, a variety of MOIC calculations are useful. Spoiler alert: we’re sharing seven of those formulas below in this post!

MOIC as a Planning Metric

Most data-driven managers work with multiple MOICs — and each MOIC answers a different question by helping them develop a more nuanced understanding of deal performance. For example, the simple MOIC can be “extended” to include future return expectations, which are usually built based on management projections and underwriting thesis. This enables us to take MOIC from a reporting into a planning perspective. Each of the below seven MOICs answers a different question to help data-driven managers make informed investment decisions.

MOICs can be further refined by separating the performance of initial investments from follow-on investments, thereby letting us analyze reserve performance standalone. It can be helpful to think of MOICs along these lines:

Each of these seven MOICs answers a different question to help data-driven managers make informed investment decisions.

Optimizing Reserves with MOIC

The Exit MOIC on Planned Reserves deserves special mention as it can help us optimize reserves by comparing the performance of one company’s reserves with another. Using a tool called Tactyc, we can automatically calculate and rank all of your portfolio companies based on this metric.

Company H yields $7 for every future $1 invested, while Company Y only returns $0.45 for each future $1 of investment. If we were limited on reserves we would look to rebalance reserves from other investments into Company H.

The reason this works is we are incorporating strategic elements from our investment thesis (such as TAM, competitive advantage, quality of management, market penetration etc.) into our expected future returns — and using these return expectations to guide our follow-on reserve strategy. In Tactyc, you can further build Base, Downside or Upside exit cases for each deal — and they will be automatically incorporated into the calculation for Exit MOIC on Planned Reserves to incorporate performance and execution uncertainty of the company.

Not Always Quite as Simple

Despite seeming simple, some of the MOIC calculations can get quite complex. For example:

  • If there are multiple follow-on investments, the Current MOIC on Deployed Reserves needs to be calculated on a weighted average share price of follow-ons.
  • Realized proceeds from partial sales need to be incorporated in every single MOIC calculation above
  • If a SAFE or Convertible Note is involved, the MOIC on initial investment needs to account for conversion price

We see only a small percentage of funds have the analytical workflows that enable calculation, tracking, and monitoring of these metrics — as calculating them in spreadsheets is not always trivial. We’ve also seen that the managers that repeatedly follow these workflows are able to better quantify their reserve planning process to LPs and also consistently outperform benchmarks. Using Tactyc, every manager can be empowered with these data-driven frameworks without having to manually build them.

About Tactyc

Tactyc is the first performance forecasting and scenario platform for VC’s and is used by 200 funds globally. Tactyc enables VCs to easily manage and forecast venture portfolios and replaces much of the traditional complicated spreadsheet workflows. If you’d like to explore Tactyc for your fund, please contact anubhav@tactyc.io or schedule a demo here.



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