Required Return Multiple
Definition
The multiple of invested capital that a venture capital investor requires at the point of a liquidity event to achieve the target internal rate of return over the expected holding period. The required return multiple is a function of the target internal rate of return and the holding period: a target of thirty percent internal rate of return over a seven-year holding period requires approximately seven times the invested capital at exit.
Common Misapplication
The most common misapplication is applying the required return multiple without specifying the holding period assumption. The same internal rate of return target requires a different return multiple depending on the holding period. A seven times multiple over five years implies a different internal rate of return than a seven times multiple over ten years.
FFI Standard Reference
This term is defined and applied in Book 4, Section 4.5: The Venture Capital Method.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Required Return Multiple. https://ffistandard.org/glossary/required-return-multiple/. 2026.