Internal Rate of Return (IRR)
Definition
IRR is the annualized rate of return an investment produces, accounting for the timing of cash flows. It is one of the two headline metrics funds report to LPs, alongside MOIC.
How it comes up in fundraising
IRR rewards speed: an early exit at a modest multiple can show a high IRR, while a long-held big multiple can show a modest one.
Frequently asked questions
What is the difference between IRR and MOIC?
MOIC measures how many times the money multiplied, ignoring time; IRR annualizes the return, making timing central.
What IRR do venture funds target?
Top-quartile venture funds have historically aimed for net IRRs in the 20 percent-plus range, though results vary widely by vintage.
Round Funded resources
Put this term to work
Definitions win negotiations only when you are in one. Find the investors who fund your stage and start the conversation.
Browse the investor database