Multiple
A ratio that shows how many times an initial investment has grown, calculated by dividing the exit value by the initial investment.
Definition
An investment multiple represents the total return on an investment expressed as a ratio. For example, a 5x multiple means the investment returned 5 times the original amount invested, regardless of the time taken to achieve that return.
Types of Multiples
Money Multiple (MoM)
Total value returned divided by total invested
Revenue Multiple
Company value divided by annual revenue
EBITDA Multiple
Enterprise value divided by EBITDA
Book Multiple
Market value divided by book value
Multiple Benchmarks
- 1x Multiple: Break-even return
- 2-3x Multiple: Decent return for most investments
- 5-10x Multiple: Strong return, typical VC target
- 10x+ Multiple: Exceptional return, "home run" investment
- 100x+ Multiple: Rare, legendary returns
Real-World Example
Uber Series A: Exceptional multiple
First Round Capital invested $1.25M in Uber's Series A, worth over $2.5B at IPO = approximately 2,000x multiple return.