References

Glossary and citations.

Definitions and source notes for the doctrine, market chapters, and research library.

Glossary

Terms across the doctrine, the IM, the research.

Definitions are written plainly so the assumptions and metrics can be reviewed without specialist context.

RETURNS

Returns and performance metrics

DPI
Distribution to Paid-In Capital. The cash returned to LPs divided by the capital called from LPs. The primary 'real money back' measure for fund performance. Reported on two bases (paid-in and committed).
TVPI
Total Value to Paid-In. Distributions (DPI) plus residual net asset value of unrealised holdings, divided by paid-in capital. Captures unrealised value alongside realised.
MOIC
Multiple on Invested Capital. Exit value divided by capital invested in a single company. Distinguishable from DPI (which is fund-level, after fees and carry).
Net IRR
The annualised internal rate of return on LP cash flows, after deduction of management fees and carried interest. A standard headline return measure for institutional comparison, usually read alongside DPI and TVPI.
Gross IRR
The annualised internal rate of return on fund cash flows, before deduction of management fees and carried interest. Used to assess GP investment skill independent of fee structure.
Paid-in capital
The capital actually called from LPs into the fund, used both for investments and management fees. This is the DPI denominator.
Committed capital
The total capital LPs have agreed to provide to the fund, called or uncalled. Used as the alternative DPI denominator for like-for-like benchmarking against funds that report on committed basis.
LP-Net basis
The reporting basis used throughout the fund's materials: distributions to LPs after deduction of management fees and carried interest, divided by capital called from LPs (paid-in) or total LP commitment (committed).
P(≥X)
The probability of meeting or exceeding a given DPI or IRR threshold. Computed against the raw 1,000-iteration simulation distribution.
SIMULATION

Simulation and modelling

Monte Carlo simulation
A computational method that runs the fund model thousands of times with randomised inputs to produce a probability distribution of possible outcomes. Used here for fund return projections.
Iterations
The number of times the simulation is run. The fund's base simulation uses 1,000 iterations per scenario.
Seed
The number that initialises the random number generator in a Monte Carlo simulation. The same seed produces the same results, allowing reproducibility. Different seeds produce different specific outcomes but should produce broadly similar distributions if the model is stable.
P10 / P25 / P50 / P75 / P90
Percentiles of the simulation distribution. P10 = 10th percentile (90% of simulations clear this; the Downside Case). P50 = median (half clear it; the Base Case). P75 = 75th percentile (25% clear it; the Target Case).
Target Case (P75)
The 75th percentile of fund outcomes across the 1,000-iteration simulation. The GP's stated return target, set above the median. Approximately 25% of simulations achieve or exceed it.
Base Case (median, P50)
The 50th percentile. The central tendency of the simulation. Half of simulations clear this level. The benchmark-comparable figure.
Downside Case (P10)
The 10th percentile. A downside reference point. 90% of simulations clear this level. Distinct from the Bear Case.
Bear Case
A separate stress simulation with coordinated parameter drift across markets. Distinct from the Downside Case, which is a percentile of the unstressed Base Case sim.
Pareto distribution / alpha
A heavy-tailed distribution where most observations cluster at low values and a few produce extreme outcomes. Used here to model winner-company MOIC. Lower alpha means a heavier tail.
p_fail / p_base / p_win
The per-region probabilities (summing to 1.0) that a portfolio company fails (0x return), produces a base-case exit, or produces a winner exit.
moic_base / moic_win
The per-region MOIC assumption for base-case exits and winner exits respectively. Winner MOICs are Pareto-distributed around moic_win.
Lever decomposition
The breakdown of return drivers into Survival (lower failure rate), Win-Rate (higher proportion of winners), and Exit Premium (winners exiting at higher multiples).
REPORTING

Reporting standards and conventions

JIT (just-in-time) capital call convention
Capital called from LPs at the moment it is deployed. Total called approaches the full commitment over the fund life.
Pre-funded reserve convention
Capital called from LPs at investment time; follow-on reserves drawn from within-fund cash. Total called is lower than the full commitment.
Convention-invariance
The modelling property that headline results are designed to remain comparable under both capital-call conventions.
Scenario / engine identifiers
Internal codes for the current Base Case configuration and simulation engine.
WATERFALL

Waterfall and fund economics

European waterfall
A carry distribution structure where LPs are repaid all called capital and the preferred return before the GP receives any carry. The alternative ('American' or deal-by-deal) pays GP carry on each successful exit.
Preferred return (pref)
The minimum annual return LPs receive before the GP earns carry.
GP catch-up
After the pref clears, the GP receives a higher share of subsequent distributions until the catch-up tier completes. Then the standard carry split applies.
Carried interest (carry)
The GP's share of fund profits after pref and catch-up.
Reserve ratio
The proportion of committed capital held back for follow-on investments rather than initial cheques.
Recycling
Reinvestment of early-exit proceeds into new portfolio companies during the investment period. Subject to a cap on the recycled share of fund size.
NECESSITIES

Necessities and screen

T1 (Tier 1)
Companies that cannot legally operate without regulatory approval (a licence, a clearance, a certification). The barrier is permission to operate.
T2 (Tier 2)
Companies whose customers are statutorily required to produce evidence, reporting, monitoring, or compliance outputs that the company enables. The barrier is evidence of compliance.
Five Necessities
Food Security Systems, Biomedical Systems, Power Systems, Autonomous Systems, Critical Materials and Supply Integrity. The five sectors that meet the fund's regulation-as-barrier test.
Crystallisation Window
The gap between a regulation's effective date and the moment a compliant operational layer exists. The window the fund enters.
Conservative classifier (33.5%)
The deterministic T1/T2 classifier that produces 33.5% regulated share of the four-market 19,416-company universe. Reproduces from shipped keyword sets alone. The single classifier used for every empirical claim.
Three-method classifier
A broader classifier (keyword + domain index + LinkedIn index + university spinout registry) maintained as a methodology sensitivity and available on request. Backs no headline figure.

Necessity Doctrine · footnotes

6 entries with citations

Chapter 01

The opening claim.

  1. [1] hmm Ventures classified universe.
  2. [2] hmm Ventures regulatory dataset. 725 regulations, 64 countries, 13 sectors.
  3. [3] hmm Ventures funding-premium analysis, 2024 four-market dataset. Premiums report median round size for regulated vs unregulated comparables.
Chapter 02

The five necessities.

  1. [1] FDA, "FSMA Final Rule for Requirements for Additional Traceability Records," compliance date 20 July 2028 (extended from 20 January 2026).
  2. [3] Government of Japan, Act on Countermeasures for Situations of Difficulty in Food Supply (Act No. 61), 2024.
  3. [4] AgFunder, "AgriFoodTech Investment Report 2025."
  4. [5] FDA, "Predetermined Change Control Plan for AI/ML-Enabled Device Software," final guidance December 2024.
  5. [6] Therapeutic Goods Administration, "Software-based Medical Devices including AI/ML," 2025.
  6. [7] hmm Ventures classified universe.
  7. [8] EU Regulation 2023/956 (CBAM). Definitive period 1 January 2026.
  8. [9] US Department of Energy, IRA capital deployment tracker, Q4 2025.
  9. [10] FAA, 14 CFR Part 108 Notice of Proposed Rulemaking, Federal Register, 2025.
  10. [11] EU Regulation 2024/1252 (Critical Raw Materials Act). 17 strategic materials.
  11. [12] Australian Government, "Critical Minerals Strategy 2023–2030." A$4 billion in announced funding.
Chapter 03

Tier 1 and Tier 2.

  1. [1] hmm Ventures classified universe. Conservative T1 / T2 classifier.
Chapter 08

The crystallisation window.

  1. [1] EU Regulation 2022/2554 (DORA). Enforceable 17 January 2025.
  2. [2] EU Regulation 2024/1689 (AI Act). Phased application 2025–2027 per Article 113.
  3. [3] MAS AI Risk Management Guidelines consultation. Twelve-month transition post-finalisation.
  4. [4] Japan AI Promotion Act, in force June 2025. AI Strategy Headquarters operational September 2025.
Chapter 09

Path A: crystallisation.

  1. [1] Bilateral financial-services regulatory bridge agreements between MAS, FCA, JFSA, APRA, and others. Disclosure documents from each regulator.
Chapter 10

Path B: fragmentation.

  1. [1] Each fragmentation component has historical precedent in at least one of the four markets. The compound scenario is hypothetical, presented as an analytical bracket, not a forecast.

Markets · footnotes

4 entries with citations

Chapter 04

Why Japan

  1. [1] Government of Japan, Act on the Promotion of Research, Development and Utilization of AI-Related Technologies (AI Promotion Act), enacted 28 May 2025. Most provisions effective 4 June 2025; AI Strategy Headquarters effective 1 September 2025.
  2. [2] Ministry of Economy, Trade and Industry (METI) and Ministry of Internal Affairs and Communications (MIC), AI Guidelines for Business v1.1 (March 2025); v1.2 reportedly in preparation per industry briefings, METI confirmation pending.
  3. [3] Ministry of Finance, Financial Statements Statistics of Corporations by Industry (法人企業統計), FY2024 annual release, September 2025. Thirteenth consecutive year of record aggregate internal reserves; excludes finance and insurance.
  4. [4] Author's compilation from corporate venture vehicle disclosures and CB Insights Japan CVC tracker, 2025 calendar year. Specific deployment volumes and inside-Japan share require independent verification.
Chapter 05

Why Australia

  1. [1] Australian Taxation Office and Department of Industry, Science and Resources, R&D Tax Incentive overview FY25.
  2. [2] Australian Prudential Regulation Authority, Quarterly superannuation industry publication, late 2025 release. Allocation ranges aggregated across MySuper products and major retail/industry funds; precise allocation per fund varies materially.
  3. [3] Australian Treasury, Better Targeted Superannuation Concessions, enacted 2025; effective 1 July 2026 per Australian Taxation Office.
  4. [4] Australian Government, strategic examinations of Australia's R&D system and innovation policy, both delivered to Government in 2025. Specific recommendations on RDTI and superannuation-VC interface.
  5. [5] APRA Prudential Standard CPS 230 Operational Risk Management, in force 1 July 2025.
  6. [6] Australian Renewable Energy Agency annual reports, 2024-25 vintage.
Chapter 06

Why New Zealand

  1. [1] New Zealand Ministry of Business, Innovation and Employment, Innovation Services transition announcement, 2025. Operational handover from Callaghan Innovation continuing through 2026.
  2. [2] Inland Revenue New Zealand, R&D Tax Incentive overview, current parameters.
  3. [3] New Zealand Growth Capital Partners, Aspire NZ Seed Fund and Elevate NZ Venture Fund disclosures, 2025.
  4. [4] Callaghan Innovation Annual Reports through FY24. Distribution figures aggregate direct grants and R&D Tax Incentive administration; precise figures vary by year and require independent verification against the official annual report series.
  5. [5] Income Tax Act 2007 (NZ), section CB 4. Revenue-account characterisation for shares acquired with a purpose of disposal.
Chapter 07

Why Singapore

  1. [1] Monetary Authority of Singapore, "Consultation Paper on Proposed Guidelines on Artificial Intelligence Risk Management for Financial Institutions," November 2025. Consultation closed January 2026; transition period twelve months from finalisation.
  2. [2] MAS, "Stablecoin Regulatory Framework: Single-Currency Stablecoins," 2024-2025 implementation. S$1M minimum capital requirement.
  3. [3] Monetary Authority of Singapore, FinTech Regulatory Sandbox, Sandbox Express, and sector-specific sandbox programmes.
  4. [4] Infocomm Media Development Authority and AI Verify Foundation, Model AI Governance Framework for Agentic AI, January 2026.
  5. [5] Inland Revenue Authority of Singapore, Section 10L of the Income Tax Act, foreign-sourced disposal gains framework, in force 1 January 2024.

Research · footnotes

0 entries with citations

No external citations in this collection yet.