TLDR:
A ten bagger is an investment that increases in value tenfold (10×) from its original cost, a term coined by investor Peter Lynch to describe exceptional investment returns.
Context Behind Ten-Bagger Returns
The ten-bagger concept, introduced by Peter Lynch in his book ‘One Up on Wall Street,’ emphasizes that extraordinary investment returns require both identifying exceptional companies early and having the discipline to hold through volatility rather than selling at the first sign of a double or triple. Lynch’s research showed that most investors sell winning stocks too early, locking in modest gains while missing the bulk of compounding returns. In venture capital, this manifests as the tension between returning capital to LPs in follow-on fund raises versus maintaining positions through multiple rounds and eventual IPO.