Investor Return Calculator
See the MOIC and IRR your investor earns at different exit valuations - and find out exactly what exit they need to hit 2x, 3x, 5x, and 10x. Understanding your investor's return profile makes you a better negotiator.
Investment details
Exit needed per return target
Based on 20.0% ownership and 5-year hold
- 2x MOIC(14.9% IRR)$10.00M✓
- 3x MOIC(24.6% IRR)$15.00M✓
- 5x MOIC(38.0% IRR)$25.00M✓
- 10x MOIC(58.5% IRR)$50.00M✓
Investor return at your exit
MOIC (Multiple on Invested Capital)
10.00x
Excellent - top-quartile territory
IRR
58.5%
annualised return
Investor proceeds
$10.00M
at exit
Investment
$1.00M
Hold period
5 years
Return benchmark
Find investors who target your exit range.
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Start Free TrialWhat founders need to know about investor returns
Every venture investor has a return target - and understanding that target changes how you negotiate valuation, dilution, and exits. A seed fund raising $50M needs to return $150M to $250M to its LPs to be considered successful. That math drives every decision an investor makes, from the check size they write to the ownership percentage they require.
MOIC (Multiple on Invested Capital) is the simplest measure: if an investor puts in $1M and receives $5M at exit, the MOIC is 5x. IRR (Internal Rate of Return) is the annualised equivalent - a 5x over 5 years is roughly 38% IRR, while the same 5x over 10 years is only about 17.5% IRR. Time matters as much as the multiple.
What VCs need to return
A typical VC fund targets a 3x net return to LPs. Given management fees and carry, the gross portfolio needs to return 4x to 5x. With a portfolio of 20 to 30 companies and a power-law distribution of outcomes, most returns come from 2 to 3 companies - so each investment needs the potential to return the fund.
Angel vs institutional targets
Angel investors typically target 10x to 20x on individual investments to compensate for high failure rates. Institutional seed funds target similar multiples but with more portfolio diversification. Series A and later-stage funds target lower multiples - 3x to 5x - but on larger check sizes. The stage of investor shapes their return expectations.
Why this affects your pitch
If an investor writes a $500K check at 10% ownership, they need a $15M exit just to return 3x. If your total addressable market cannot support a $50M+ exit, the math does not work for a VC - but it might work perfectly for an angel. Matching your raise to the right investor type starts with understanding their return requirements.
Frequently asked questions
- What is a good MOIC for a venture investment?
- Seed-stage investments typically need to show the potential for 10x to 30x to justify the risk. Series A investments target 5x to 10x. At later stages, 3x to 5x is considered strong. These are gross figures - net returns to LPs after fees and carry are lower. A 3x gross fund return is roughly the minimum threshold for a VC to raise a follow-on fund.
- What is the difference between MOIC and IRR?
- MOIC measures the total multiple returned regardless of time: $1M in, $5M out = 5x MOIC. IRR measures the annualised rate of return and accounts for time: a 5x over 3 years is roughly 71% IRR, while the same 5x over 10 years is about 17.5% IRR. Investors care about both - a high MOIC over too many years produces a disappointing IRR. Most VC funds have a 10-year life, making the hold period a real constraint.
- How do I know what exit valuation my investor needs?
- Start with their ownership percentage and their target MOIC. If they own 15% and want 10x on a $500K investment, they need $5M in proceeds - which requires a $33M exit at minimum. Use the target table in this calculator to see what exit valuation corresponds to each MOIC target at the current ownership and hold period.
- Does dilution affect investor returns?
- Yes, significantly. If an investor enters at 20% ownership but gets diluted to 10% through later rounds, their return at the same exit valuation is halved. Pro-rata rights allow investors to maintain their ownership percentage in follow-on rounds - this is why pro-rata is a standard term in early-stage deals and why sophisticated investors negotiate hard to keep it.
- What is a realistic exit timeline for venture-backed startups?
- The median time from seed to exit for venture-backed companies has historically been 7 to 10 years. Most VC funds model a 5 to 7 year hold period for planning purposes. Exits before 5 years are rare at scale; holding past 10 years creates IRR drag even at high multiples. When modelling returns, 5 to 8 years is a realistic base case for most early-stage investments.
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