IRR (Internal Rate of Return)

IRR is the annualized return of a fund or deal accounting for exactly when cash was called and returned. Unlike MOIC it rewards speed: the same 3x earns a far higher IRR over four years than over ten. Venture IRRs are unreliable early — the J-curve depresses them, then a single markup can inflate them — so LPs weigh IRR alongside multiples, and interim venture IRR is best treated as a rough sketch.