Performance
Internal rate of return
Also known as IRR
The annualised rate of return that reflects when cash goes in and comes out.
IRR rewards returning money early, so it can be flattered by short holding periods and subscription lines. That is why LPs read it together with multiples such as TVPI and DPI.
Why it matters when you raise
Quote IRR alongside a multiple. On its own it invites scepticism.
Related terms