Holding Period
Definition
The time between an investor's initial investment in a company and the expected liquidity event, expressed in years. The holding period is a required input in the venture capital method and affects the required return multiple: a longer holding period requires a higher exit multiple to achieve the same internal rate of return as a shorter holding period at the same multiple.
Common Misapplication
The most common misapplication is assuming a uniform holding period for all investment categories. Early-stage venture capital investments typically have holding periods of five to ten years. A venture capital method calculation that uses a three-year holding period produces a required return multiple appropriate for later-stage investments, not early-stage investments.
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: Holding Period. https://ffistandard.org/glossary/holding-period/. 2026.