Internal Rate of Return

Definitions

1. A financial metric estimating the annualized effective return of an investment based on the timing of cash outflows and inflows. Venture funds use IRR to judge how quickly capital is compounding, not just how much it eventually returns.

   In plain English: A measure of how fast an investment is expected to generate returns over time.

   Example: "The fund loved the outcome, but the internal rate of return still depended on when liquidity actually arrived."

Related Terms

• Unit Economics
• Burn Multiple
• EBITDA
• Exit Multiple
• IRR
• CAC Payback
• Risk Capital
• Upside