# MAD Ventures — Full Insights Corpus > Capital for what AI can't replace. MAD is a capital platform backing growth-stage companies applying new science and engineering to restore the systems humanity depends on. Voice and naming conventions: the fund is "MAD Fund 1" (Arabic numeral, never Roman "I", never "Hyperscalers"). The founder development product is the "assessment" (never "diagnostic"). No em-dashes. Source: https://mad.vc — generated 2026-09-10 from the live insights corpus. --- ## Asked to Win: The Case for Backing Women Founders URL: https://mad.vc/insights/asked-to-win-backing-women-founders Published: 2026-06-20 Byline: By Mark Falzon and Mac Christopherson | MAD Ventures Category: Founders > A MAD Ventures white paper on the evidence for backing women founders: how much capital they receive, how their ventures perform, what happens in the room where funding is decided, and what shapes the raise. A MAD Ventures white paper for eligible Australian wholesale investors, US accredited investors, sponsors, and founder programs. At a glance Women are starting companies faster than at any point on record, run them with proven capital efficiency, and still receive a fraction of the investment that flows to men. All-women founding teams receive around 2 per cent of venture capital globally, and about the same in Australia in 2024, with the Australian run-rate falling below half a per cent in 2025. Yet women-founded ventures return 78 cents of revenue for every dollar invested, against 31 cents for men, and generate more cumulative revenue on less than half the capital. The gap in funding is not a gap in performance. It is a mispricing, and the levers that correct it, capital-readiness, a room that rewards the ask, and a pathway designed so that women put their hand up, are practical and available. The funding gap Definitions change the numbers, so it helps to be exact. All-women teams means every founder is a woman. Teams with at least one woman founder describes a far broader group and always produces a larger figure. The two are routinely confused, and the space between them is where a lot of optimistic headlines live. In Australia, all-women founding teams received about 2 per cent of venture capital in 2024, down from 4 per cent in 2023, and the 2025 run-rate has them tracking below half a per cent, a new low. Teams with at least one woman founder took 24 per cent of capital in 2025, up from 15 per cent, but that gain is misleading. Deal participation for female-founded teams actually fell from 28 per cent to 24 per cent, and the top five female-founded companies took 79 per cent of all the capital that reached women-led teams. The pattern beneath is a leaky pipeline: women raise at the earliest stages and fall away at Series A and beyond. In the same reporting, only 18 per cent of female founders said they felt supported by investors. The wider picture rhymes. Of the 289 billion US dollars invested globally in 2024, all-women teams received 2.3 per cent, all-male teams 83.6 per cent, and mixed teams the remainder. At the current rate of change, parity arrives around 2065. The counterweight is the growth in women starting businesses. Women launched 49 per cent of all new US businesses in 2024, up from 29 per cent in 2019. There are now around 14.5 million women-owned businesses in the US, 39.2 per cent of all firms, generating 3.3 trillion dollars in revenue. Scale is the qualifier: average revenue across all women-owned businesses is around 226,000 dollars, well below men-owned firms, and much of women's entrepreneurship is deliberate and lifestyle-shaped, financed through debt and personal networks rather than equity. One US headline flatters the picture: companies with at least one female founder reached a record 27.7 per cent of deal value in 2025, but strip out two AI mega-rounds, Anthropic and Scale AI, and the share falls to around 16 per cent, while all-female teams went backwards. In Europe, female-founded startups, counted as teams with at least one woman, raised 5.76 billion euros in 2024, which is 12 per cent of all European venture capital. A 2025 study commissioned by the European Commission named the cause plainly: only 16 per cent of general partners in venture and growth funds are women, and they manage 9 per cent of assets. Its authors called it a power problem rather than a pipeline problem. The performance paradox The reason the funding gap is a mispricing, and not a reflection of quality, is that women-led ventures perform. Boston Consulting Group's analysis with MassChallenge of 350 startups found that companies founded or co-founded by women raised an average of 935,000 dollars, against 2.1 million for male-founded companies, yet generated 10 per cent more cumulative revenue over five years. For every dollar of funding, women-founded startups returned 78 cents of revenue against 31 cents for men, more than twice the value per dollar invested. First Round Capital's decade of portfolio data points the same way. The advantage extends to exits. PitchBook's 2024 analysis found female founders reaching exit around six months faster on average and accounting for a record share of US venture exits. BCG's own reading of why the gap persists is worth holding onto: investors are, in their words, predisposed to look for big, bold numbers, and they reward the founder who swings for the fences, a style the market codes as male. On failure, the evidence is genuinely mixed, and it is worth being precise rather than convenient. Some UK studies of company insolvency by board gender have found male-dominated companies failing at a higher rate than female-dominated ones, though the same researchers caution this likely reflects the sectors men tend to run rather than any difference in competence. The JPMorgan Chase Institute found women-owned businesses surviving at the same rate as men-owned, despite lower revenues and slower growth. The honest summary is that women-led ventures are more capital-efficient and at least as durable, and that the stronger, cleaner claim is efficiency, not a lower failure rate. The mechanism in the room If women perform and still raise less, something is happening between the founder and the cheque. The clearest account comes from Dana Kanze and colleagues, who recorded seven years of pitch question-and-answer sessions. Investors asked male founders promotion questions, about the potential for gains, and asked female founders prevention questions, about the potential for losses, by a ratio of about two to one. The consequence was measurable. Every additional prevention question tracked with roughly 3.8 million dollars less raised, and founders who fielded mostly promotion questions went on to raise about seven times more than those who fielded mostly prevention questions. Two features matter for anyone trying to fix it. Male and female investors both did it, so simply adding women to the investment committee does not resolve it. And the effect is partly within a founder's control: entrepreneurs who answered a prevention question with a promotion focus, redirecting from risk to opportunity, raised significantly more. The room shapes the raise, and the shaping can be coached against. The psychology, and its legacy The internal side of the gap is real, widely misread, and the part most likely to be handled badly. The often-quoted figure that men apply for a role at 60 per cent of the listed qualifications and women only at 100 per cent comes from an old, never-published internal report. The behaviour is real: LinkedIn's data shows women applying to around 20 per cent fewer jobs while being hired more often when they do. But the usual reading, that women lack confidence, does not survive scrutiny. When Tara Mohr surveyed more than a thousand professionals, the most common reason both men and women gave for not applying was not doubt in their ability but a belief that they would not be hired without the stated qualifications. What held them back was a mistaken reading of the process, not of themselves. The impostor phenomenon was named in 1978 in a study of high-achieving women, and the measured gap appears in entrepreneurship: across every economy the Global Entrepreneurship Monitor studies, women rate their own entrepreneurial ability below men and report a greater fear of failure. But the dominant framing has been challenged, and the challenge is well made. Tulshyan and Burey argue that labelling this an individual syndrome misplaces the cause, and that for many women the sense of not belonging is not a distortion but an accurate reading of a room that was not built for them. There is also a penalty for the ask, and it turns caution from a flaw into a calculation. When women do the things raising capital requires, self-promote, negotiate hard, hold a room, they are penalised in ways men are not. Decades of experimental research show assertive, self-promoting women judged competent but less likeable and less promotable. In negotiation it costs money: women who negotiate for more are resisted, and the same women negotiate as hard and as well as men when they do it on someone else's behalf, at no penalty. A founder raising capital is performing the most self-promotional act there is, at the highest stakes, in the room where the penalty is sharpest. The pattern is trained early. Girls are rewarded for being neat, correct, and pleasing while boys are rewarded for boldness and for taking the hit. Reshma Saujani's shorthand, that girls are raised to be perfect and boys to be brave, describes a perfectionism that keeps work in draft and asks unspoken while a founder waits to feel ready. Read together, these threads do not describe a deficit to be corrected with encouragement. They describe a set of responses, learned through socialisation and sustained by real penalties, that are for the most part rational. The strategic consequence is that the work is to change the conditions, not the woman. What moves the number The levers that shift women's funding outcomes are known, and they are structural rather than motivational. Dedicated preparation works: Tech Nation's research found participants in structured, women-focused programs about 2.1 times more likely to secure funding within twelve months than non-participants. This is the practical form of the Kanze finding, since capital-readiness includes the skill of meeting a prevention question with a promotion answer. Who allocates matters. France's public co-investment quota, which requires funds seeking government co-investment to meet a female-founder threshold, produced a 35 per cent increase in female-founder funding. And committed capital follows evidence: the Minderoo Foundation has committed up to 8 million dollars over four years to female founders through Startmate, arguing the case on the same performance evidence set out here. The direction of travel is toward treating women founders as an underpriced opportunity rather than a diversity obligation. Implications, and where MAD sits For investors, the case is a portfolio case before it is a fairness case. A cohort that returns more revenue per dollar, exits at least as quickly, and is systematically underpriced is an opportunity a disciplined investor should want, not overlook. For sponsors and foundations, the money goes further here than almost anywhere, because the constraint on most capable women founders is not talent but capital-readiness and access to the right room, both of which are inexpensive to provide relative to the ventures they release. For founder programs, the design lesson is specific. If women will not put their hand up until they meet every criterion, a high, intimidating bar filters out the founders most worth backing. The entry has to be low-stakes and openly invitational, with the real judgement happening quietly, through an assessment, rather than as a wall a founder must feel worthy of climbing. The room itself has to reward the ask rather than punish it. MAD Ventures' own position rests on this reading. Across the ventures MAD has shortlisted for investment, close to 60 per cent were led by women, a revealed preference rather than a stated one. The Venture Compass, MAD's capital-readiness assessment, and the VC Mastermind, its twelve-month founder program, are built to do the three things the evidence calls for: ground a founder's self-assessment in an objective reading of her venture, teach the reframe that the funding room rewards, and open a door designed so that women walk through it. A note on method and confidence This paper distinguishes what is well established from what is contested. The capital-efficiency finding, the funding shares, the questioning mechanism, and the backlash research are strong and replicated. The confidence gap and the impostor phenomenon are real as measured behaviour but disputed as explanations, and are treated here as symptoms of conditions rather than causes in the individual. The claim that women-led businesses fail less often is genuinely mixed, and is not relied upon. Where a figure counts all-women teams, it is distinguished from the broader count of teams with at least one woman founder. MAD's own shortlist figure is internal data, offered as disclosure rather than as independent evidence. References Cut Through Venture, State of Australian Startup Funding 2025, and Cut Through Quarterly reporting, 2025. Founders Forum Group, Women in VC and Startup Funding: Statistics and Trends, 2025. Gusto, New Business Formation Report, 2025. Wells Fargo, Impact of Women-Owned Businesses Report, 2025. US Census Bureau, Annual Business Survey and Nonemployer Statistics by Demographics, 2025. Global Entrepreneurship Monitor and Babson College, United States Report, 2024 to 2025 (Donna Kelley et al.). Azoulay, Jones, Kim and Miranda, Age and High-Growth Entrepreneurship, MIT, Northwestern and US Census Bureau, 2020. Female Foundry, Female Innovation Index 2025. European Commission and European Innovation Council, study on the gender investment gap in European venture capital, 2025. Boston Consulting Group and MassChallenge, Why Women-Owned Startups Are a Better Bet, 2018. First Round Capital, The 10 Year Project. PitchBook, All In: Female Founders in the VC Ecosystem, 2024 and 2025 reports; US 2025 figures reported by Fortune, 2026. Company Rescue and Creditsafe, analysis of UK SME insolvency by board gender, 2024. KSA Group, analysis of company insolvency by director gender, 2018 and 2023. JPMorgan Chase Institute, research on the survival of women-owned businesses. Global Entrepreneurship Monitor, Women's Entrepreneurship Report, 2012 and 2024 to 2025 editions. Kanze, Huang, Conley and Higgins, We Ask Men to Win and Women Not to Lose, Academy of Management Journal, 2018, and Harvard Business Review, 2017. Hewlett-Packard internal report, as cited in Lean In and subsequent coverage. Tara Sophia Mohr, Why Women Don't Apply for Jobs Unless They're 100% Qualified, Harvard Business Review, 2014. LinkedIn, Gender Insights Report, Tockey and Ignatova, 2019. Clance and Imes, The Imposter Phenomenon in High Achieving Women, Psychotherapy: Theory, Research and Practice, 1978. Bravata et al., Prevalence, Predictors and Treatment of Impostor Syndrome, Journal of General Internal Medicine, 2020. Tulshyan and Burey, Stop Telling Women They Have Imposter Syndrome, Harvard Business Review, 2021. Rudman, Heilman, Moss-Racusin and colleagues, research on the backlash effect; and Catalyst, The Double-Bind Dilemma for Women in Leadership, 2007. Bowles, Babcock and Lai, Social Incentives for Gender Differences in the Propensity to Initiate Negotiations, 2007, and Babcock and Laschever, Women Don't Ask, 2003. Reshma Saujani, Brave, Not Perfect, 2019, and associated TED talk, 2016. Tech Nation, research on outcomes for participants in dedicated female-founder programmes. Minderoo Foundation and Startmate, female founders funding alliance, 2025. Founders building real-economy companies are welcome to begin with the Venture Compass, MAD's capital-readiness assessment, or to enquire about the VC Mastermind. Wholesale-qualified investors and family offices interested in the Information Memorandum and Partnership Deed for MAD Fund 1 are welcome to enter the Investor Room, or use the contact form for a private conversation. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## What the 2026 Budget Did to Australian Private Capital URL: https://mad.vc/insights/what-the-2026-budget-did-to-australian-private-capital Published: 2026-05-13 Byline: By Mark Falzon and Mac Christopherson | MAD Ventures Category: Capital > Positives and unintended consequences of the 2026-27 federal budget for the VC sector, and the intended, conditional ESVCLP structure for MAD Fund 1. Investor briefing for eligible Australian wholesale investors, US accredited investors, and family offices. Version 1.1, 13 May 2026. At a glance Three tax settings that matter for private capital are changing. From 1 July 2027: the 50 per cent CGT discount is replaced by indexation plus a 30 per cent minimum rate, and negative gearing is restricted to new builds. From 1 July 2028: a 30 per cent minimum tax on discretionary trusts at the trustee level. Background Last night's federal budget rearranged the tax framework for Australian capital in ways that will take years to fully digest. The 50 per cent capital gains tax discount is gone from 1 July 2027, replaced by cost-base indexation and a 30 per cent minimum rate. Negative gearing on residential property is restricted to new builds from the same date. Discretionary trusts face a 30 per cent minimum tax at the trustee level from 1 July 2028. Foreign investors remain locked out of established homes until mid-2029. The headlines have focused on property. The more interesting story for private capital sits one layer below that. What the budget actually does is shift the relative attractiveness of where Australian investors put productive capital. Property and trust-held wealth become more friction-heavy. Direct equity investing loses its long-hold tax advantage. For a fund that obtains unconditional ESVCLP registration and remains compliant, the structure may become relatively more attractive as restructured capital looks for a home. This is a brief on what that means for VC investors, and where MAD sits in it. The positives for venture capital Five measures in the budget make Australian venture capital more attractive on a net basis. Expanded VC asset caps from 2027-28. If enacted and applicable, the higher asset thresholds may make more late-stage Australian companies eligible for investment by unconditionally registered and compliant ESVCLPs and VCLPs, potentially allowing funds to hold positions longer through the growth curve before forced exits. Permanent $20,000 instant asset write-off. Portfolio companies with under $10 million in turnover get a permanent cash-flow benefit on capex. For real-economy operators building physical capacity, this matters more than for software-led businesses. Reintroduced loss carry-back for companies up to $1 billion turnover. From 2026-27, companies making a loss in the current year can claim a refund against tax paid in the prior two years. Useful for portfolio companies running through a build-cycle quarter and useful for fund reserve and follow-on planning. Loss refundability for start-ups from 2028-29. Capped at FBT plus PAYG withholding, the measure targets the post-Series-A phase rather than the validation phase, but for portfolio companies that have already hit payroll it materially reduces cash burn over the next two operating years. R&D Tax Incentive reform from 2028-29. The core experimental R&D offset rises from 25 to 50 per cent, and the refundable offset turnover threshold lifts to $50 million for firms under ten years old. Stronger for young innovation-intensive portfolio companies, tighter and non-refundable for older firms above $50 million. These five measures together signal that the government wants productive capital moving into Australian operating businesses. An ESVCLP may offer a tax-effective LP outcome only after unconditional registration and while continuing compliance is maintained. The unintended consequences The same budget produces friction for the VC sector that the headlines have not picked up. The CGT discount removal cuts directly into direct-investment after-tax returns. For an angel or family office writing cheques on balance sheet, the after-tax return on a successful exit drops measurably from 1 July 2027. Indexation helps in high-inflation periods but the 30 per cent minimum is the binding floor for most successful outcomes. This is the most consequential and least-discussed VC implication of the budget. Founder exit timing compresses into the next 14 months. Strategic acquirers know this. Founders running quiet processes in 2026 will face buyers who understand the calendar is against the seller. Valuations on exits booked in 2027 may be softer than 2026 marks on the same company. R&D incentive uncertainty for two and a half years. Innovation-intensive portfolio companies will defer some R&D investment or pull it forward into the safe window. Cash flow planning across the portfolio gets harder until the new rules land. Capital flight risk inside the LP base. High-net-worth families restructuring around the trust reform will look at offshore alternatives. Australian-domiciled VC funds need to demonstrate, in pre-tax and post-tax terms, why staying onshore is the better outcome. Labour market crowd-out from defence and housing build-out. The $53 billion defence commitment over ten years and the housing infrastructure spend compete for the same engineering and skilled-trades talent that portfolio companies in industrial tech, advanced manufacturing, energy, and infrastructure need. Wage pressure across these segments rises through 2027. The growth-stock penalty in listed markets. Investor preferences will tilt toward dividend-paying mature companies, which sits against the venture thesis on the public-market exit side. Listed market capital becomes harder to attract into growth companies, which affects exit valuations at IPO. The structural point most LPs have not yet processed For an unconditionally registered and compliant ESVCLP, eligible Australian investors may qualify for tax concessions on income and capital from eligible investments, plus a 10 per cent non-refundable carry-forward tax offset on eligible contributions. Availability depends on continuing compliance and each investor's circumstances. Any ESVCLP-related treatment of CGT, trust tax, or indexation depends on unconditional registration, continuing compliance, eligible investments, the investor's circumstances, and applicable law. The ESVCLP framework has not changed. The environment around it has. If unconditional registration is obtained and continuing compliance is maintained, the structure may be tax-effective for eligible Australian private capital. Capital previously deployed into negatively-geared property, trust-held passive portfolios, or direct equity for the CGT discount may seek alternatives. Any relative tax advantage of an ESVCLP remains conditional on unconditional registration, continuing compliance, investor eligibility, and applicable law. Where MAD Fund 1 sits MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Our thesis is contrarian by design. Real companies making real things. Not software. Not apps. We invest in operators building productive capacity in the Australian economy, in segments where the demand curve is structural and the supply chain is constrained. The 2026-27 budget did not change the ESVCLP framework, but it changed almost everything around it. Any ESVCLP concessions still depend on unconditional registration and continuing compliance. Property as a tax-effective asset class is being repriced. Trusts as wealth structures are being reorganised. Direct equity is losing its long-hold tax shelter. MAD Fund 1 is an Australian-domiciled vehicle for productive capital. Its intended ESVCLP tax treatment is conditional on unconditional registration and continuing compliance. We did not design it around this budget, but the budget made the intended structure relevant. For LPs who have been weighing direct property investment, trust restructuring, or offshore migration, an ESVCLP route may warrant consideration. Any tax efficiency for family offices and high-net-worth investors depends on unconditional registration, continuing compliance, investor circumstances, and applicable law. The quiet story The 2026-27 budget repriced Australian private capital. Negative gearing will get the headlines. The trust reform will produce the longest tail of restructuring. The CGT change will reshape direct investment behaviour. The ESVCLP was designed to channel Australian capital into early-stage ventures. Its relative attraction may have changed without a change to its rules, but all concessions depend on unconditional registration and continuing compliance. For investors paying attention, that signal is worth more than the headlines. We are open to conversations with LPs and family offices thinking through what the budget means for capital allocation over the next 24 months. Mark Falzon and Mac Christopherson are the co-founders of MAD Ventures and the general partners of MAD Fund 1. Eligible Australian wholesale investors, US accredited investors, family offices, and their advisors are welcome to enter the Investor Room for the Information Memorandum and Partnership Deed, or use the contact form for a private conversation. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary on the 2026-27 Australian federal budget. It is not personal tax, financial, or investment advice and does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. MAD Fund 1 is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Past performance is not a reliable indicator of future performance and capital is at risk. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Why MAD Is a Platform, Not a Fund URL: https://mad.vc/insights/why-mad-is-a-platform-not-a-fund Published: 2026-04-26 Byline: By Mark Falzon and Mac Christopherson | MAD Ventures Category: Capital > A foundational explanation of the MAD architecture, and why the future requires integrated capital platforms rather than single-purpose funds. Capital is not passive. It is an active choice. It is architecture, and it builds the future the world will operate in. The question is not whether capital is being deployed. It is being deployed at scale, every day, by hundreds of trillions of dollars of institutional and private capital across the global economy. The question is what kind of future that deployment is building. Most venture funds are built on a simple premise. Raise capital from limited partners. Deploy it across a portfolio of high-growth companies. Wait for outcomes. Distribute returns. Repeat. That premise has worked, in the periods and the categories where it suited. It has also produced a particular kind of company: optimised for hypergrowth, dependent on follow-on funding, valued on stories about future cash flows that often never arrived. The model rewarded volume over discipline. It funded a thousand bets in the hope that two would carry the rest. It produced unicorns and casualties in roughly the same ratio. That model is now under structural pressure. The asset class venture capital was built to serve, software-led, capital-light, exit-driven, has reached maturity in some sectors and is being repriced in others. AI is accelerating change across every corner of the economy and commoditising the categories that drove the last decade's returns. Meanwhile, the systems the world actually depends on, the food systems, the energy systems, the health systems, the water systems, the waste systems, sit underfunded, fragmented, and breaking down. The companies that will rebuild those systems do not fit the standard venture model. They have revenue and traction. They have capital efficiency. They have credible exit pathways. What they do not have is a capital instrument designed for what they are. MAD was built to address that gap. Not by raising another fund of the same shape, but by designing a different kind of architecture entirely. A platform, not a fund MAD is a capital platform. Not a fund. The distinction matters. A fund is a single capital pool with a single deployment thesis, a single term, and a single set of LPs. It does one job. When the term ends, the fund winds down, the GP raises the next vehicle, and the cycle restarts. A platform is the operating layer above the funds. It carries the intellectual property, the diligence capability, the operating bench, the founder development methodology, and the ecosystem relationships that make the funds possible in the first place. The funds are the deployment mechanism. The platform is what makes them defensible. There are five engines inside the MAD platform. The Fund Platform is the deployment layer. MAD Fund 1 is the anchor vehicle, intended to be registered as an Australian ESVCLP. Registration is currently conditional, and any tax concessions depend on unconditional registration and continuing compliance. The Hong Kong feeder is established. The Singapore vehicle is in development. Future jurisdiction-specific vehicles will be considered as investor demand and regulatory pathways align. Each fund is a discrete instrument; together they form a coherent, multi-jurisdiction deployment architecture. The Venture Compass is the assessment methodology. Eight forces, the Gap, the X Factor, and a structured way of evaluating, supporting, and growing the companies the platform invests in. The Compass is published intellectual property, co-authored by Mark Falzon and Mac Christopherson, with foreword by Michelle Duval. It is how MAD selects, supports, and grows portfolio companies. Advisory and Capital Formation is the strategic services layer. Advisory work for growth-stage companies and family offices. Capital formation services for ventures preparing for institutional rounds. Generates platform-level revenue, reinforces deal flow, and surfaces opportunities the fund itself can back. Mastermind, Education, Ecosystem is the founder development layer. The VC Mastermind program (a curated, application-only mastermind for founders scaling through complexity), the Ambassador network of 37 operators across food security, energy transition, regenerative finance, and impact, and the broader ecosystem of advisors and partners. This layer compresses the time, the risk, and the cost of scaling. It closes the Gap faster than capital alone can. The Catalytic Capital Layer is in development. A philanthropic first-loss layer designed to absorb early risk and bring larger pools of private and institutional capital into the architecture. Built directly into MAD Fund 1 as Class B subordinated units rather than as a separate vehicle. Governed by the MAD Impact Advisory Board, chaired by Radha Kuppalli, with Hector Mujica supporting. Each engine reinforces the others. The advisory work produces a richer pipeline for the fund. The mastermind produces stronger founders for the portfolio. The Ambassador network compounds with each new member. The Compass methodology improves with each assessment completed. The catalytic layer attracts senior capital that would not otherwise enter at this scale. It is not three funds. It is one fund built on three founding principles. Together they create a unified architecture: Regenerative Capital Design. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025 Why a platform is the right unit of construction now The standard fund model has limits that the platform model does not. A fund deploys capital. A platform deploys capital, capability, and coherence. The companies MAD backs are not capital-constrained alone. They are capability-constrained. They need capital that fits their commercial reality, plus the operating bench that helps them scale through it. The Compass assessment, the mastermind cadence, the Ambassador network, the advisory function, all sit upstream of the fund itself. None of them exist inside a standard fund structure. All of them exist inside the platform. A fund has a single thesis. A platform has a coherent set of theses that share a common architectural logic. MAD's Restoration, Transition, and Transformation framework is not a sector list. It is the articulation of where capital is rotating to and where the platform is positioned to back it. The fund deploys against that articulation. The other engines reinforce it. A fund returns capital and ends. A platform compounds. The Ambassador network gets more valuable each year. The assessment methodology improves with use. The catalytic layer attracts more philanthropic partners as it operates. The advisory book builds relationships that become future deal flow. None of this happens inside a single closed-end fund. All of it happens inside the platform that surrounds the fund. A fund is bound by the structure it was designed under. A platform can launch new vehicles as the world changes. The Hong Kong feeder serves Mainland China and Hong Kong qualified investors under appropriate regulatory framework. The Singapore vehicle in development will serve Singapore and broader Asia-Pacific institutional and family office investors. Future vehicles will follow the demand and the regulatory pathways. The platform is the connective tissue that makes that expansion coherent. What this means for capital For investors, the practical consequence of a platform architecture is that capital can enter at multiple layers, with different return profiles, different risk positions, and different time horizons. At the LP layer of MAD Fund 1, capital is deployed into the fund itself. Quarterly income distributions tied to portfolio performance. Equity upside on company growth. Diversified portfolio of post-revenue Australian real-economy companies. Intended ESVCLP tax treatment remains conditional on unconditional registration, continuing compliance, and eligible investments. At the platform layer, capital participates in the operating company that sits behind every MAD fund. Share of management fees across all current and future MAD funds. Share of carried interest across funds. Revenue from Venture Compass, advisory, and ecosystem services. As each fund scales, the platform scales alongside it. The investor is not exposed to a single fund's performance. The investor is exposed to the operational engine that produces fund performance across a multi-vehicle architecture. At the catalytic layer (in design), philanthropic capital sits as a Class B subordinated layer inside the fund deed, absorbing first loss and producing a measurable multiplier on the dollar deployed. Class A receives full capital recovery and preferred return before any Class B distribution. The architecture creates a five-to-ten-times effect on the catalytic dollar. A single investor can hold positions across more than one of these layers. Capital deployed into the platform can be structured to roll into the fund as LP capital while retaining holding-level equity, dual exposure across two distinct economic layers from a single architectural decision. This is what a platform makes possible. It would not be possible inside a single closed-end fund. What the platform is built to back The platform is built to back companies that fit a specific profile. Post-revenue. Real-economy. Capital-efficient. With recurring or subscription revenue models. With founders who have industry expertise and prior high-growth track record. With a credible exit pathway within the fund's term. Applying new science, engineering, or processes to a system the world depends on. Enhanced by AI and robotics, not replaced by them. The thesis is articulated as Restoration, Transition, and Transformation. Restoration is the work of repairing damaged systems: soil regeneration, waste conversion, water systems. Transition is the work of upgrading existing systems to more efficient models: energy infrastructure, supply chains, manufacturing. Transformation is the work of producing what the world needs in new ways: precision fermentation, new materials, clinical breakthroughs. The companies in each of these categories share a common pattern. They are solving real problems for paying customers. They are operating at the intersection of physical reality and intelligent systems. They are positioned in sectors where capital is now rotating, away from the speculative software-only categories that defined the last decade, and toward the real-economy categories that the next decade depends on. They do not look like traditional venture deals. They look like industrial businesses with technology multipliers. That is precisely the point. Why the platform exists The case for the platform is finally philosophical, not just structural. Capital is not neutral. Every civilisation expresses itself through the way it allocates resources. The capital architecture of the last forty years was designed for a particular kind of economy: one in which financial engineering compounded faster than physical infrastructure, in which short-term metrics drove long-term decisions, in which extraction was rewarded and stewardship was not. That architecture produced extraordinary outcomes for some. It also produced the systemic fragility we are now living through. The case for a platform like MAD is the case for a different kind of capital architecture. One that is fit for purpose. One that is structured for scale without speculation. One that uses philanthropy as catalyst rather than as substitute. One that is designed around transformation rather than around exit. The platform is the unit of construction. The fund is the deployment mechanism inside it. The companies are what the system exists to serve. And the architecture is the answer to a question the standard model can no longer answer: what does capital look like when it is built for the systems the world actually depends on? Capital is not passive. It is an active choice. It is architecture, and it builds the future the world will operate in. From MAD Group platform thesis, 2026 Structure is the final form of philosophy. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025 Read more about the architecture in the MAD book in our Books library. Wholesale-qualified investors interested in the Information Memorandum and Partnership Deed for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Capital for Restoration, Transition, and Transformation URL: https://mad.vc/insights/capital-for-restoration-transition-transformation Published: 2026-04-26 Byline: By Mark Falzon | MAD Ventures Category: Capital > The three-part thesis behind MAD's investment focus. Where value is moving, why, and what kind of capital the systems the world depends on actually need. The world is repricing. AI is accelerating change across every sector. It is also commoditising the asset class venture capital was built for. The categories that drove the last decade's extraordinary returns, software, application-layer technology, platform plays, are facing structural headwinds as foundation-model capability expands and intelligence itself becomes a commodity input. The same companies that produced 156 percent of S&P 500 returns between 2023 and 2024 are now down 4.9 percent in 2026, while capital is rotating toward energy (up 23 percent), materials (up 18 percent), and industrials (up 14 percent). The rotation is structural, not cyclical. At the same time, the systems the world actually depends on are underfunded, fragmented, and breaking down. Food. Energy. Health. Water. Waste. The infrastructure of life itself, the systems that keep eight billion people alive, has been starved of investment by a generation of capital that preferred software margins to physical reality. That is where value is moving. That is where MAD invests. The world is not short of opportunity. It is short of alignment. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025 The three-part thesis MAD invests across three categories. Together they form the architecture of where capital is rotating to and where the platform is positioned to back it. Restoration: repairing damaged systems Decades of extraction have left the systems life depends on in measurable disrepair. Soil carbon stocks have collapsed across most agricultural land. Water systems leak, contaminate, and run dry. Waste accumulates faster than the planet processes it. Coastal ecosystems, forests, and watersheds are stressed past the threshold of natural recovery. Restoration is the work of repairing those systems. It is also the work of building the businesses that do that repairing. Soil regeneration ventures using new biological inputs. Waste conversion businesses turning what is currently landfill into circular feedstock. Water systems that capture, clean, and redistribute at industrial scale. Coastal and ecological restoration that operates as enterprise, not as charity. These are not philanthropic exercises. They are companies with paying customers, recurring revenue, and competitive economics. The customers exist because the regulatory framework has shifted (water utilities required to meet new standards, councils required to divert waste from landfill, agricultural buyers requiring traceable regenerative inputs). The revenue is recurring because the underlying demand is structural rather than cyclical. The competitive economics are emerging because the technology has crossed the threshold where doing things the regenerative way is now cheaper than doing them the extractive way. Restoration is where capital is moving because Restoration is where margin is forming. Transition: upgrading existing systems to more efficient models Most of the world's critical infrastructure was designed for an economy that no longer exists. Energy grids built around centralised fossil generation. Supply chains built around just-in-time logistics that fail at the first geopolitical shock. Manufacturing systems built around cheap labour and cheap freight in a world that has neither. Health systems built for episodic care in a population that increasingly needs continuous management. Transition is the work of upgrading those systems. Distributed energy infrastructure that turns rooftops into power stations and homes into participants in the grid. Supply chains rebuilt around resilience rather than only around cost. Manufacturing reshored, automated, and electrified. Health systems redesigned around continuous data and remote monitoring. The companies doing this work share a profile. They sit on top of existing infrastructure rather than replacing it from scratch. They generate recurring revenue from operating the upgraded layer. They benefit from regulatory tailwinds that price-in the externalities the old infrastructure ignored. They are capital-intensive at the deployment stage and capital-efficient at scale. They look like industrial businesses with technology multipliers, because that is what they are. Transition is the largest of the three categories by capital required. It is also the most directly investable, because the customers exist, the contracts are signed, and the unit economics work today. Transformation: new ways of producing what the world needs The third category is the one that is hardest to see and easiest to underestimate. Transformation is the work of producing what the world needs in fundamentally new ways. Not optimising existing systems but replacing them with systems that did not exist a decade ago. Precision fermentation that produces proteins, fats, and complex molecules without animal agriculture. New materials, structural, electronic, biological, that do at room temperature what previous materials did only at industrial extremes. Clinical breakthroughs that move from one-size-fits-all pharmacology to precision interventions targeted at individual biology. Manufacturing techniques that print buildings, vehicles, and components from raw inputs without the supply chains the old systems required. These are the companies that will define the next twenty years. They are also the companies that traditional venture capital has struggled to fund well, because they do not behave like software businesses. They have physical capital requirements. They have regulatory pathways that take years rather than months. They scale through manufacturing rather than through user acquisition. They look more like biotech, cleantech, or industrial technology than like the SaaS companies the venture model was optimised for. Transformation is where the asymmetric outcomes will sit. It is also where the architecture of capital matters most. What these three have in common Restoration, Transition, and Transformation are not arbitrary categories. They are three views of the same underlying shift. Each backs companies that solve real problems for paying customers. Each operates at the intersection of physical reality and intelligent systems. Each is positioned in sectors where structural demand is growing rather than where speculative narratives are being constructed. Each rewards capital efficiency, recurring revenue, operational maturity, and alignment with planetary and community boundaries. Each is enhanced by AI and robotics rather than replaced by them. And each requires a kind of capital that the standard venture model is not built to supply. Capital that is patient enough to ride the longer development curves of physical and biological systems. Structured enough to generate income during the life of the deployment rather than only at exit. Aligned enough to keep founders building at sustainable pace rather than chasing the next round. Catalytic enough, where appropriate, to absorb the first-loss risk that brings larger pools of senior capital into the structure. That is the kind of capital MAD is built to supply. Designed around transformation, not speculation. Momentum based, not fantasy based. Resilience based, not volatility based. Regenerative, not extractive. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025, Chapter 8 Why now The case for this thesis is partly cyclical and partly structural. Cyclically, capital is rotating. The categories that drove the last decade are repricing. Allocators are looking for places to redeploy. Real-economy categories with credible cash flows and structural tailwinds are now competing successfully for institutional capital that previously went to speculative growth. Structurally, the underlying drivers are not going away. Climate stress is increasing demand for restoration. Energy transition is reshaping every grid on earth. Demographic shifts are reshaping health and food systems. AI is reorganising labour, productivity, and value across the economy in ways that make the underlying physical systems more important, not less. The companies that solve these problems will operate for decades, not for one fund cycle. And philosophically, there is a reckoning underway. The capital architecture that produced extraordinary outcomes for some over the last forty years also produced the systemic fragility we are now living through. A growing share of investors, family offices, and institutions are looking for capital instruments that align with the world they want to leave behind, not just with the returns they want to extract before doing so. Restoration, Transition, and Transformation is the answer to that question, expressed as a deployment thesis. What it looks like in practice The companies the platform evaluates against this thesis share a common profile. Post-revenue with proven business models. Australian-headquartered with global ambitions, assessed against the intended ESVCLP eligibility requirements. Any ESVCLP treatment remains conditional on unconditional registration and continuing compliance. Sectors aligned to food security, environmental resilience as primary, with health and education as secondary. Sustainable recurring or subscription revenue. Founders with industry expertise and prior high-growth track record. Credible exit pathway within the fund's term. Applying new science, engineering, or processes to a system the world depends on. Enhanced by AI and robotics, not replaced by them. What they look like, concretely: companies running distributed renewable assets at scale. Companies converting industrial waste streams into commodity feedstock. Companies producing food and materials through fermentation rather than through extraction. Companies operating sensor networks across agriculture, logistics, or health that deliver continuous data instead of episodic measurement. Companies that build, operate, and improve real-world systems and use AI as the layer that makes them more effective. They are not the companies that dominated venture portfolios in the last decade. They are the companies that will dominate the next. A closing note on alignment The deepest reason for this thesis is also the simplest. The world is short of alignment between what capital chases and what humanity needs. The systems that sustain life are starving for investment while speculative categories absorb capital they do not productively use. Mark Falzon's MAD book frames it directly: capital is not neutral. Every civilisation expresses itself through the way it allocates resources. The capital architecture of the last forty years expressed one set of priorities. The next architecture will express another. Restoration, Transition, and Transformation is what alignment looks like as a deployment thesis. It is the answer to a question allocators are increasingly asking, and the systems the world depends on are increasingly demanding. Read more about the architecture in the MAD book in our Books library. Wholesale-qualified investors interested in the Information Memorandum for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Why AI Makes the Physical World More Valuable, Not Less URL: https://mad.vc/insights/why-ai-makes-the-physical-world-more-valuable Published: 2026-04-26 Byline: By Mac Christopherson and Mark Falzon | MAD Ventures Category: AI and Real-World Systems > A practical argument for why real-world systems become more important in the age of AI, not less, and what that means for capital. There is a story being told about AI that goes roughly like this. Artificial intelligence will reshape the economy. The most valuable companies of the next twenty years will be the ones that build, train, and deploy intelligence at scale. The physical economy is becoming a commodity layer beneath an intelligent one. The future is software, and software is eating the world. It is half right. AI is reshaping the economy. The companies that build and deploy intelligence will absorb extraordinary value. But the conclusion that follows from those two facts, that the physical world becomes less valuable as intelligence becomes more abundant, is wrong. The opposite is true. As intelligence is commoditised and labour markets are reorganised at unprecedented scale, the systems that intelligence acts on, the food, the energy, the materials, the manufactured goods, the physical infrastructure, become more valuable, not less. That is the inversion at the heart of the MAD thesis. And it is the inversion most allocators have not yet priced in. Start with the labour-market shift Begin with the most concrete observation, the one that does not require any aggressive assumption about how fast artificial general intelligence arrives. Even on the most conservative consensus, the economic deployment of AI over the next decade will produce the largest labour-market reorganisation since the urbanisation that accompanied industrialisation. You do not have to believe the most aggressive timeline. The moderate consensus alone is enough to drive everything that follows. What does that reorganisation actually do to the demand for the things humans need? The standard story says the answer is "less of everything, because productivity rises and economic output is more efficient". The accurate answer is the opposite. When the economy reorganises at this scale, demand for the basics, food, energy, health, water, the systems that keep populations alive, does not fall. It rises. People still eat. Buildings still need power. Health systems are required by larger ageing populations, not smaller ones. The physical systems that sustain life become more important in absolute terms even as they become a smaller share of nominal GDP. That is the central paradox of the moment. The most abundant input the economy is producing, intelligence, is being deployed largely in service of itself. AI building AI infrastructure. AI investing in AI startups. AI optimising AI advertising. Meanwhile, the systems that have to keep functioning under the pressure of the reorganisation, the systems the world actually depends on, are receiving a fraction of the capital that flows into the abundant input. That is the misallocation the next decade is going to correct. The commoditisation of intelligence The other half of the story sits on the supply side of intelligence itself. The economics of AI are unusual. Foundation-model capability is increasing on a curve that has no historical precedent. Compute costs per unit of capability are falling. Open-source alternatives to proprietary models are catching up with closed leaders within twelve to twenty-four months of release. Specialised models that previously required research-lab capability now run on consumer-grade hardware. The practical consequence is that intelligence as a service is following the path of every previous infrastructure technology: from scarce and expensive to abundant and cheap. The first electric utilities were extraordinary monopolies. Within a generation, electricity was a commodity. The first internet service providers had pricing power. Within a generation, bandwidth was a commodity. AI is on the same trajectory, on a faster timeline. When intelligence itself becomes a commodity input, like electricity or bandwidth, the software products built on top of it lose their defensibility. An AI model that costs $100 million to train today will cost $1 million in three years and be open source in five. Every SaaS product, every AI-native startup, every platform built on proprietary intelligence is vulnerable to the next model iteration. The moats drain faster than they fill. This does not mean all software companies die. It means the venture model of backing dozens of software bets and hoping for one or two unicorns becomes structurally less reliable. Hit rates drop. Exit multiples compress. Holding periods extend. The category itself is being disrupted by the technology it depends on. Investing in AI application companies today carries echoes of investing in early web portal companies in 1998. Some will survive. Most will be absorbed by the foundation-model providers themselves, who keep adding capability and turning yesterday's startup product into next year's default feature. Look at the list of AI application darlings that defined the venture narrative two years ago and check how many have had their value proposition substantially absorbed by the next foundation-model release. The pattern is consistent. The pattern is also accelerating. What gets more valuable when intelligence gets cheap When a critical input becomes cheap, the things it acts on become more valuable. This has been true of every infrastructure transition in modern economic history. Cheap electricity made factories more valuable, not less. The factories existed before the grid. What electricity did was make them an order of magnitude more productive. The same was true of cheap bandwidth and the businesses it served. Logistics, retail, financial services, all became more valuable, not less, as the connectivity layer became free. The companies that built and operated the underlying physical systems were the durable winners. The infrastructure they ran on top of was the commodity input. The same dynamic now applies to intelligence. The cheaper intelligence becomes, the more valuable the physical systems it makes more efficient become. A precision agriculture business with access to commodity AI is dramatically more productive than the same business without it. A waste-conversion plant with continuous machine-learning optimisation is more productive than one without. A distributed energy network with intelligent dispatch is more useful than one without. A precision-fermentation business with AI-accelerated process design moves to market faster than one without. In every case, the AI is the input. The physical system is the output. As the input gets cheaper, the output, the operating physical infrastructure, gets more valuable. AI is accelerating change across every sector. But it doesn't replace the systems humanity depends on. Food. Energy. Health. Water. Waste. These systems are under pressure and must be rebuilt. This is where value is moving. From MAD Group platform thesis, 2026 What this means for venture capital The implication for capital is direct. The companies that will absorb the most value over the next twenty years will not be primarily software businesses. They will be physical, biological, and infrastructure businesses, in food, energy, health, water, materials, and waste, that use commodity AI as a multiplier on their underlying operating system. They will not look like the companies that drove the last decade's venture returns. They will look like industrial businesses with technology multipliers. They will have physical capital requirements. They will operate in regulated industries. They will scale through deployment of physical assets, not through user acquisition. Their margins will improve as they operate, not as they raise. They will generate cash earlier, distribute earlier, and exit through a wider range of acquirers than the typical venture portfolio. They will need a different kind of capital than the typical venture portfolio receives. Capital that is patient enough to ride longer development curves. Structured enough to generate income during deployment rather than only at exit. Aligned enough to keep founders building rather than always selling the next round. The 80/20 model that combines structured growth capital with equity participation is built for this profile, because the profile is real and the standard venture model does not serve it. The other side of the argument There is a serious case to be made on the other side. Foundation-model providers are absorbing extraordinary value. The largest of them are now among the most valuable companies in history. The compute infrastructure they require, GPUs, data centres, energy, is the largest single capital build-out in human history. Some forecasts put it at $6 to $8 trillion globally by 2030. That capital is going somewhere, and a portion of it will produce extraordinary returns. The physical AI infrastructure thesis is real. Capital allocated to compute, networking, cooling, and power for the AI build-out will compound. The energy transition itself is partly a function of AI infrastructure demand. The metals, materials, and manufacturing required to build that infrastructure constitute a real-economy thesis with serious tailwinds. But almost all of that thesis is already priced in by hyperscaler equity, large-cap industrial equity, and the existing infrastructure asset class. It is not where venture capital adds the differentiated return. The differentiated return for venture capital sits in the smaller, faster, more entrepreneurial companies that use the infrastructure rather than build it. Companies that take commodity intelligence and apply it to a real-world problem with operating-cash economics. The MAD platform is built around that thesis. A wider context There is also a wider context that is worth naming, even briefly. The AI build-out is not happening in isolation. It is happening at the same time as a measurable repricing of capital, a structural rotation away from speculative software toward real-economy categories, and a moment in which institutional investors are rethinking what their capital should do. Mark Falzon has written elsewhere, in a separate piece on the broader political and economic context, about the way the AI build-out is being financed largely from public capital pools, pensions, sovereign funds, endowments, while the upside is concentrated in a small number of private companies. The systemic question that raises is one for governments and policy bodies to answer. The investment question that follows is also worth naming. If much of the AI build-out itself is being financed by public capital flowing into a handful of mega-cap private and public companies, then the differentiated return for private investors does not sit there. It sits in the next layer down: the operating businesses that use commodity AI to make real-world systems work better. That is where the MAD platform is positioned. What follows from this A few things follow from the inversion described in this article. First, exposure to AI-native software companies is more vulnerable than it looks, because the moat assumption underneath those companies is being eroded by the foundation-model layer they depend on. Second, exposure to physical, biological, and infrastructure businesses that use AI as a commodity input is less vulnerable than it looks, because those businesses become more productive as the AI input becomes cheaper. Third, the venture model that worked for the last decade is structurally less reliable for the next. The combination of compressed software margins, longer holding periods, and a wider range of physical and infrastructure outcomes requires capital instruments that are better matched to the underlying business profile. Structured capital plus equity. Income during deployment plus upside on growth. Multi-vehicle architecture rather than single-thesis funds. Fourth, the right place to be allocating venture capital now is to companies that operate physical systems, in the sectors the world depends on, with AI as the input rather than the output. That is the MAD thesis. It is also why MAD is positioned the way it is, structured the way it is, and built around the engines it has. AI is making the physical world more valuable, not less. The capital architecture that recognises this will compound. The architecture that does not will be the one that gets repriced. Read more about the thesis in the MAD book in our Books library. Wholesale-qualified investors interested in the Information Memorandum for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## The Era of the Giraffe URL: https://mad.vc/insights/the-era-of-the-giraffe Published: 2026-04-26 Byline: By Mark Falzon | MAD Ventures Category: Founders > Why venture needs a new founder archetype, grounded in resilience, reach, awareness, and practical adaptability. For the better part of two decades, venture capital was looking for unicorns. The metaphor mattered. Unicorns were rare, mythical, dramatic. They appeared once in a portfolio, justified the rest of it, and disappeared into the canon as the founder of the year. The model behind the metaphor was simple: spread bets thin, hope two carry the rest, accept that the other dozens will fail. That metaphor produced a particular kind of founder. Young, often male, often technical, often with a single insight pursued with absolute conviction. Lean, fast, able to break things. Built for the sprint to the next round. Optimised for narrative, for momentum, for getting to the next valuation. There were extraordinary companies built by these founders, and there will be more. But the archetype was always narrower than the population of companies that actually create durable value, and narrower still than the population of companies the world now needs. The next decade calls for a different metaphor. Not a unicorn. A giraffe. Founders are not short on ambition, creativity or drive. They are short on clarity. From Michelle Duval, foreword to The Venture Compass, 2025 What the giraffe actually is A giraffe is not mythical. It is real. It exists in observable populations, on actual savannahs, doing actual work. It is also the tallest land animal on earth, with a range of vision no other species matches. It can see threats coming from kilometres away. It can reach food sources nothing else can reach. It moves at speed when it has to, and stands still when it has to, and has heart musculature evolved for the unusual physiology its height requires. It is, in other words, an animal that has solved a particular set of physical problems through a particular combination of traits. Tall enough to see and reach. Strong enough to defend itself. Adaptable enough to feed on what others cannot. Resilient enough to keep moving. Aware enough to read its environment. None of these traits is mythical. All of them are observable, evolved, and replicable. That is the founder archetype the next era of venture needs. Not a mythical creature whose existence is the point. A real, observable, replicable kind of operator who has solved a particular set of business problems through a particular combination of traits. The four traits of the giraffe founder Four traits, drawn from observation across the founders MAD has worked with, mentored, advised, and backed over more than four decades. 1. Resilience Resilience is the capacity to keep operating through the difficult periods every venture has. The pivot that did not work. The hire that did not work out. The capital round that took twice as long as expected. The customer that churned. The personal pressure that compounds when professional pressure is already at maximum. The unicorn archetype rewarded a different version of this: the founder who refused to acknowledge difficulty, pushed harder, broke through. That version of resilience produced extraordinary outcomes when it worked. It also produced a long catalogue of burnout, breakdown, and damaged founder lives that the public mythology never recorded. The giraffe version of resilience is different. It is the capacity to absorb difficulty without distortion. To keep building under pressure without becoming someone you do not recognise. To know when to push and when to rest, when to commit and when to reconsider, when to accept the loss and when to keep moving. It is grounded resilience rather than performed resilience. It does not depend on heroic narrative. It also tends to be the kind of resilience that scales. Founders who burn themselves out at the seed stage do not get to build the company at the growth stage. Founders who carry their teams through difficulty without breaking the people around them are the founders who actually compound across decades. 2. Reach Reach is the capacity to operate across more than one domain. To understand the technology and the market. To work with the engineers and the customers. To hold a serious conversation in the boardroom and another one on the factory floor. To translate between investors and operators, between regulators and product teams, between the day-to-day and the long arc of the business. Single-domain founders can build remarkable products. They tend to struggle when those products meet the world. The world does not respect domain boundaries. Customers do not care that you are a technical founder. Regulators do not adjust their requirements because you are a business founder. The companies the world now needs, in food, energy, health, water, waste, sit at the intersection of multiple domains. They require founders who can reach across. Reach is not the same as breadth without depth. The giraffe founder has a primary capability, a thing they are deeply expert in, plus the ability to extend into adjacent domains as the business requires. Reach is the auxiliary skill that the primary skill cannot replace. 3. Awareness Awareness is the capacity to read the environment accurately. Not the capacity to predict the future, which no one has. The capacity to see what is actually happening, around the company and inside the company, without distortion. External awareness reads the market, the regulatory environment, the competitive set, the macro context. It is the founder who saw the rotation coming six months before the consensus did. It is the founder who recognised that the customer they thought was happy was actually quietly evaluating alternatives. It is the founder who registered the regulatory shift in time to position for it. Internal awareness is harder and more important. It is the capacity to see what is actually happening inside the team, the relationships, the culture, the commercial model. It is the founder who recognised that the head of product was about to leave, that the co-founder relationship was fraying, that the unit economics were drifting in the wrong direction quarter by quarter. The unicorn archetype often had extraordinary external awareness and almost no internal awareness. The giraffe archetype has both. Awareness is also the precondition for clarity. As Michelle Duval has written, founders are not short on ambition, creativity or drive. They are short on clarity. Clarity comes from awareness, applied with discipline, over time. 4. Practical adaptability Practical adaptability is the capacity to change without breaking. To adjust the strategy when the strategy is wrong. To revise the plan when the plan is no longer the best plan. To do this without the loss of conviction that some founders interpret as the only alternative. The unicorn archetype was prone to confusing conviction with rigidity. Hold the position, push through, do not waver. That worked when the original conviction was correct. It produced catastrophic outcomes when the original conviction was wrong, and most original convictions are at least partly wrong, in detail if not in direction. Practical adaptability holds the underlying mission stable while changing the path to it. It distinguishes between the destination and the route. It treats new information as the input it is rather than as the threat it can feel like. It does not require the founder to abandon the company's identity each time the market evolves. It allows the company to evolve without the founder losing themselves in the process. Practical adaptability is what survives twenty-year companies. Most companies that exist for twenty years do not look anything like the companies they started as. The product evolved. The market evolved. The team evolved. The capital structure evolved. The thing that stayed constant was the founder's capacity to adapt practically without losing the underlying purpose. Why the giraffe is the right archetype now The unicorn archetype was built for a particular kind of business: software-led, capital-light, exit-driven, optimised for the sprint to the next round. That kind of business is not going to disappear. But it is going to be a smaller share of the business population over the next twenty years. The companies the world now needs operate in physical reality. They have regulatory pathways. They have manufacturing requirements. They scale through deployment of physical assets, not through user acquisition. They have multi-year sales cycles with sophisticated buyers. They are run for decades, not for the typical seven-year fund cycle. They benefit from founders who can stand at full height, see far, reach into multiple domains, absorb difficulty without distortion, and adapt without breaking. That is the giraffe. The metaphor is not poetic. It is operational. Failure should not be expected; it should be understood. Success should not be accidental; it should be engineered. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025, Chapter 9 What this means for capital If the founder archetype is changing, the capital that supports them must change too. Capital designed for unicorn-archetype founders rewards speed, narrative, and round-to-round momentum. It tolerates burnout, churn at senior levels, and distortion of the company in the service of the next valuation. It backs many bets and accepts that most will fail. Capital designed for giraffe-archetype founders rewards different things. Sustainable pace. Coherent decisions. Founder development as a deliberate practice. Sequencing capital to commercial reality rather than to round timing. Backing fewer companies, deeper, and supporting them through the multi-decade arc that real-economy companies actually require. That is the kind of capital MAD is built to provide. Structured growth capital that generates income during the life of the deployment. Equity participation that aligns the platform with the company across years rather than across funding rounds. The Venture Compass assessment that tells the founder where they are and what to work on next. The VC Mastermind program that develops the founder through the actual difficulty of scaling. The Ambassador network that compresses the time, risk, and cost of the work. The era of the unicorn produced extraordinary outcomes for some, and a long tail of damage for many. The era of the giraffe will produce more durable outcomes across a broader population of founders, in the sectors the world now needs. The capital architecture that recognises this will compound. The architecture that keeps looking for unicorns in a savannah of giraffes will be looking in the wrong place. Read more about the founder development methodology in The Venture Compass, available in our Books library. Founders building real-economy companies in food, energy, health, water, or waste are welcome to apply to the VC Mastermind or to enquire about MAD's growth capital pathway via the For Founders page. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## What Venture Capital Gets Wrong About Scaling URL: https://mad.vc/insights/what-vc-gets-wrong-about-scaling Published: 2026-04-26 Byline: By Mac Christopherson and Mark Falzon | MAD Ventures Category: Capital > A critique of traditional venture assumptions, and the missing middle for growth-stage companies that need a different kind of capital. Scaling is the part of the venture story that gets the least honest treatment. The narrative is familiar. The company finds product-market fit. It raises a Series A. It hires a head of growth. It deploys the capital into customer acquisition. It hits the metrics. It raises a Series B at a higher valuation. It does it again. Eventually it hits a target the next round can underwrite, raises again, and continues to a meaningful exit. That story is not wrong, exactly. It is just incomplete. And the incomplete version produces a particular pattern of failure that the venture industry has, on the whole, declined to look at directly. The pattern is this: companies that have something real, with real customers, real revenue, and real demand, fail not because the product was wrong, but because the capital strategy was wrong. They raised too much, too fast, with too much dilution, optimising for round-to-round momentum rather than for the kind of company they were actually building. They were given the capital instrument designed for software-only, hypergrowth, exit-in-five-years businesses, and asked to use it to build something that operated under different physics. The instrument did not fit. The strategy that the instrument required did not fit. And the company that emerged was either distorted into something it was never meant to be, or it failed for reasons that had little to do with what the company was actually doing. You cannot solve a structural problem with a tactical answer. From The Venture Compass, Falzon and Christopherson, 2025 The pattern: when the capital does not fit Two short cases, drawn from the work the platform has done with founders over years, illustrate the pattern. Names and details are altered to protect commercial relationships, but the architectural problems are real. Case A: when the right idea meets the wrong capital path A growth-stage company in regenerative agriculture had something genuinely interesting. Real product. Recurring revenue from sophisticated agricultural buyers. A defensible technology stack with a credible IP position. A founder team with deep industry expertise. The kind of company that the world needs more of and the venture industry says it wants to fund. The company raised a Series A from a generalist software fund. The fund did the diligence well, agreed the thesis, and committed at a valuation that priced in software-margin economics. The terms were standard for the fund: heavy preferred-equity stack, anti-dilution provisions calibrated for an aggressive growth path, milestone expectations matched to the next round in eighteen months. The problem was not the fund. The fund was acting in line with its own model. The problem was that the model did not match the company. Regenerative agriculture does not behave like software. The customer sales cycle is twelve to eighteen months, not weeks. The unit economics improve through field deployments and learning curves, not through performance marketing. The competitive moats are operational, regulatory, and relational, not narrative. What the company needed was structured capital that paid down through customer revenue, plus modest equity to align long-term partners. What it received was equity capital structured for a software trajectory it was never going to follow. The eighteen-month round expectation forced the founders to push for revenue growth on a timeline that distorted their commercial relationships and burned cash on customer acquisition that did not stick. By month sixteen, the next round was uncertain. By month twenty, the company was raising a bridge round at a punishing valuation. By month thirty, the founders had lost most of their equity, the technology was being sold off in pieces, and the customers had moved to a competitor that had grown more slowly with better-aligned capital. The product was right. The market was real. The capital path was wrong. The company did not fail because of its product. It failed because of its capital structure. And the venture industry recorded the failure as a market problem rather than as a structural one. Case B: the cost of the wrong capital strategy A second company, in distributed renewable energy, had a clearer technical advantage and a faster path to commercial revenue. The product worked. The customers were sophisticated. The unit economics were positive at scale. The company raised three consecutive equity rounds in eighteen months as it grew. Each round was larger than the last. Each round was at a higher valuation. Each round was structured for the next, with covenants and milestones that assumed continuous high growth and continuous follow-on capital availability. Then the macro environment shifted. Capital markets tightened. The next round did not arrive on the previous schedule. The company had to extend runway by cutting commercial activity, the very activity that was generating the revenue growth that would have justified the next round. The cuts hit pipeline before they hit costs. The pipeline took six months to recover. The recovery happened just in time to raise a flat round at the previous valuation, after a period of unnecessary stress. The company survived. It is operating today. But its founders spent eight months in capital-driven crisis when they should have been spending those months growing the company. The cost was not the equity dilution alone. It was the eight months of attention diverted, the team morale impact, the customer relationships that needed mending, the credibility cost with the broader market. The cause was structural. The company had been encouraged to take equity-only capital at scale on the assumption that follow-on capital would always be available. When that assumption broke, the company had no other instrument to fall back on. A different structure, structured growth capital that paid down from customer revenue, with a smaller equity sleeve that did not require a continuous round cadence, would have produced the same outcome on growth without the eight months of preventable distress. The architectural assessment Both cases share an underlying architecture problem. Capital was structured for one type of business and applied to another. The mismatch was not visible at the time of the round. It became visible when the company met its actual operating reality. The standard venture model has assumptions baked into it about growth pace, unit economics, customer behaviour, and exit timing. The model works when those assumptions match the company. When they do not, the model produces stress that is interpreted as performance failure but is actually structural mismatch. The companies the world now needs, in food, energy, health, water, waste, frequently do not match the standard venture assumptions. They have longer sales cycles. They have physical capital requirements. They have regulatory pathways. They generate cash earlier and exit through more diverse acquirers than the venture-software pattern. They look more like industrial businesses with technology multipliers than like the SaaS companies the venture model was built for. Putting these companies into a venture-software capital structure does not just produce slower returns. It produces structural failure. The case studies above are not anomalies. They are the predictable outcome of an instrument-business mismatch. Capital without capability just accelerates dysfunction. Capital is a lever. Community is the multiplier. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025, Chapter 9 What the right capital actually looks like Capital that is fit for these companies has four characteristics. First, it is structured. Some component of the capital is repaid through the operating cash flows of the business, not through dilution at the next round. This produces income for investors during the life of the deployment, and it sequences capital to the company's commercial reality rather than to a round cadence. Second, it has equity exposure aligned to the long arc, not to the next round. A modest equity sleeve preserves capital growth optionality for investors without diluting founders to the point where they lose the agency to keep building. The equity is the upside on a multi-year story, not the only mechanism by which capital returns. Third, it is paired with capability. Capital alone is not what scales companies. Founders who can sequence the work scale companies. The Venture Compass assessment, the VC Mastermind cadence, the Ambassador network, the advisory function, all of these compound on the capital. They are not separate to it. They are part of the operating system that makes the capital useful. Fourth, it is patient where patience matters and disciplined where discipline matters. Patient about the underlying multi-year story. Disciplined about the quarter-by-quarter commercial reality. The founders who scale companies well do both, in sequence, repeatedly. The capital instrument has to support that. The missing middle The category of capital described above does not have a clean home in the existing capital stack. Banks do not lend it; the risk profile is too high. Standard venture funds do not deploy it; the return profile is not built around the unicorn outcome that justifies the model. Private credit funds do not deploy it; the equity component does not match the credit fund's return target. Family offices and high-net-worth investors increasingly want this profile but have lacked instruments built for it. That gap is what the venture industry calls the missing middle. It is the category between early-stage venture and late-stage growth, where the company has revenue, traction, and capital efficiency but does not yet have the scale or stability that institutional credit and growth-equity buyers require. Most of the companies that will rebuild the systems the world depends on sit in the missing middle. They are too advanced for grant funding. They are too small for institutional growth equity. They are too capital-intensive for traditional venture. They have been operating for years without an instrument designed for them. That is the gap MAD Fund 1 is built to fill. The 80/20 model, structured growth capital plus equity sleeve, generates income during deployment and aligns long-term participation in upside. The Venture Compass assessment and Mastermind cadence supply the capability layer. The Ambassador network adds operating depth. The platform compounds across multiple vehicles and engines. What this means for allocators Allocators have a structural opportunity in the missing middle. The category is real. The demand from companies is established. The supply of suitably structured capital is limited. The companies in the category are not the speculative venture bets that defined the last decade; they are operating businesses with revenue and traction that need capital matched to their commercial reality. The structural opportunity is the same as it was in the early days of any new asset class. The category exists. The instruments are being built. The allocators that participate early will compound across the cycle. The allocators that wait until the category is fully institutionalised will participate at lower returns and at scale that no longer requires conviction. What venture capital gets wrong about scaling is that scaling is not about more capital. It is about the right capital, in the right structure, paired with the right capability, deployed at the right time. Get the architecture right and the company scales. Get it wrong and the company breaks under capital that should have supported it. The case studies that opened this article are not exceptions. They are the predictable outcome of structural mismatch. The instrument that fixes the mismatch is what MAD has built, and what the missing middle has needed for some time. Read more about the assessment methodology behind this analysis in The Venture Compass, available in our Books library. Wholesale-qualified investors interested in the Information Memorandum for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Why Australia Needs a Global Capital Bridge URL: https://mad.vc/insights/why-australia-needs-a-global-capital-bridge Published: 2026-04-26 Byline: By Mark Falzon and Mac Christopherson | MAD Ventures Category: Singapore and Global Capital > How Australian innovation can be better connected to international capital and markets, and what kind of architecture that connection actually requires. Australia has a particular kind of innovation economy. It is technically strong in the sectors that matter most for the next twenty years: agricultural technology, water management, mining and resources, energy transition, biotech, clinical research, environmental science. It has globally recognised research institutions feeding into a smaller-than-it-should-be commercial pipeline. It has founders with real industry expertise, often building companies that solve genuinely global problems from a domestic base. What it does not have, structurally, is a strong connection between those companies and the global pools of capital that should be backing them. The result is a familiar pattern. Australian companies do the hard early work in country, build the technology, secure the early customers, and then move offshore (often to the United States) to access the capital required for the next phase of growth. The headquarters relocate. The management decision-making moves. The eventual exit goes to a foreign acquirer at a price that captures only a fraction of the value the company will produce. The intellectual property, the manufacturing, and the long-term economic upside all leave the country that built them. This is not because Australian capital is unwilling. It is because the architecture connecting Australian companies to global capital, and global capital to Australian companies, is incomplete. That is the gap MAD Global is built to address. The structural problem Australian capital markets are sophisticated and deep at one end. The superannuation system is one of the largest pools of pension capital per capita in the world. The institutional and wholesale investor base is substantial. The regulatory framework is well-developed. But the architecture of capital available to growth-stage Australian companies in real-economy sectors has structural gaps. Australian super funds are largely allocated to global indices and large-cap exposure. Australian venture capital is small relative to the size of the opportunity, and concentrated in software-led categories that do not match the country's comparative advantage in real-economy science. Australian private equity tends to deploy at a scale and ticket size that suits later-stage buyouts, not the missing middle of growth-stage capital. Meanwhile, global capital that should be flowing into Australian opportunities (Asian family offices and institutions interested in agricultural technology, water, energy transition, biotech, and resources) has limited access pathways into the country. Direct investment requires local diligence capability that is hard to deploy at the relevant scale. Existing fund structures are not always built for cross-border participation. The information asymmetries are significant. The result is a country with strong companies that struggle to find capital, and capital pools that struggle to find Australian companies. The bridge between them is what is missing. It takes a village to raise a company. Capital is a lever. Community is the multiplier. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025 Why this is now urgent The structural gap has been there for decades. What makes it urgent now is the convergence of three shifts. First, the sectors where Australia is strongest are the sectors where global capital is now rotating. Food security, water management, energy transition, critical minerals, biotech, regenerative agriculture. These are not niche allocations any more. They are core themes for institutional allocators rebuilding portfolios around the next twenty years rather than the last twenty. Second, the regulatory and tax framework in Australia has improved in ways that may make the country more attractive for the right kind of capital. For an unconditionally registered and compliant ESVCLP, eligible investors may qualify for flow-through tax concessions on income and capital gains from eligible investments and a non-refundable 10 percent tax offset on eligible contributions. Availability depends on continuing compliance, investor circumstances, and applicable law. Third, the geopolitical reordering of the past several years has redirected attention to the Asia-Pacific in a way that puts Australia at the centre of multiple long-cycle stories. Resources security. Food security for the Asia-Pacific. Energy transition. Critical materials. Australia is positioned at the intersection of all of these themes, with a stable regulatory framework, deep technical capability, and proximity to the largest growing markets in the world. The country has rarely been more important to the global capital architecture, and the gap between that importance and the current capital flow is wider than it should be. What a bridge looks like architecturally A capital bridge is not a single fund. It is a multi-vehicle architecture designed for participation from different jurisdictions, under appropriate regulatory framework, with a shared underlying deployment thesis. At the centre of the architecture is the Australian fund itself. MAD Fund 1 is the anchor vehicle, intended to be registered under the ESVCLP regime, deploying into Australian growth-stage companies in food, energy, health, water, and waste. Registration is currently conditional, and any tax concessions depend on unconditional registration and continuing compliance. The fund provides the deployment capability and the local presence that any bridge architecture requires. Around that anchor sit the cross-border participation pathways. The Hong Kong feeder is established, providing access to qualified investors from Hong Kong and Mainland China under appropriate regulatory framework. The Singapore vehicle is in development, designed to serve Singapore, Southeast Asia, and broader Asia-Pacific institutional and family office investors. Future jurisdiction-specific vehicles will be considered as investor demand and regulatory pathways align. The platform connecting these vehicles is what makes the bridge coherent rather than a list of separate products. The same diligence capability, the same operating bench, the same Compass methodology, the same Ambassador network. Investors entering from any jurisdiction are participating in the same underlying deployment thesis, with the structural advantages of their own regulatory environment. This is what MAD Global is. Not a single product. The architecture that allows Australian companies to access the right kind of global capital, and global capital to access Australian companies, with the structural integrity that both sides require. What it means for Australian companies For Australian companies in the sectors MAD backs, the bridge architecture has practical consequences. It means access to a wider pool of growth capital without needing to relocate. The capital can come from Hong Kong, Singapore, eventually other jurisdictions, and still flow through to the company through an Australian fund structure. The company stays Australian, the management stays Australian, the headquarters stays Australian. The capital that backs it can be global. It means a different relationship with future expansion. Companies that need to access Asian markets can do so with capital partners who have direct presence and pattern recognition in those markets. The Hong Kong feeder is not just a capital pathway. It is a relationship pathway. The Singapore vehicle, when it is in operation, will be the same. Capital that knows the markets you are expanding into is structurally different from capital that does not. It means a different relationship with the eventual exit. Companies built with global capital partners from the outset have a wider range of acquirers and a wider range of public-market pathways than companies built with purely domestic or purely US capital. The shape of the exit follows the shape of the cap table. What it means for global allocators For allocators outside Australia, the bridge architecture also has practical consequences. It means access to a market that is structurally underserved by capital. The supply of capital relative to the quality of opportunity is favourable in Australian growth-stage real-economy categories in a way that it is not in most other developed markets. The allocators who participate early in this category compound across the cycle. It may mean access to ESVCLP tax treatment where appropriate, but only if unconditional registration is obtained and continuing compliance, investor eligibility, and applicable-law requirements are met. For the right investor categories, that intended framework may offer a structural advantage. It means access through a vehicle structured for their own jurisdiction, with the local diligence capability and the operating bench that direct investment cannot easily replicate. Singapore family offices participating through the Singapore vehicle, when established, will be participating with the same diligence depth and operating support that Australian wholesale investors participate through the Australian fund. A closing note on direction The case for an Australia-Asia capital bridge is not new. It has been argued for decades, by trade bodies, government agencies, and a long line of policy documents. What is new is that the architecture to actually build it is now operationally possible, and the convergence of macro, structural, and regulatory shifts makes the moment to build it now rather than later. Australia's comparative advantage in the sectors that matter for the next twenty years is real. The companies that will solve global problems from an Australian base exist. The capital that should be backing them is available, in pools that have not yet found a clean pathway in. Subject to unconditional registration and continuing compliance, the intended ESVCLP framework may provide structural support. The platform model makes the cross-border architecture coherent. The next phase is execution. That is what MAD Global is built to do. The architecture connecting Australian innovation to international capital and markets is no longer a missing piece. It is a working bridge under active construction. Read more about the platform architecture in the MAD book in our Books library. Wholesale-qualified investors in Australia, Hong Kong, Mainland China, Singapore, and other jurisdictions interested in MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Singapore, Family Offices, and the Next MAD Chapter URL: https://mad.vc/insights/singapore-family-offices-and-the-next-mad-chapter Published: 2026-04-26 Byline: By Mark Falzon and Mac Christopherson | MAD Ventures Category: Singapore and Global Capital > Why Singapore matters to the global MAD platform, and what the next chapter of the architecture is being built to deliver. Singapore is, by some distance, the most important capital hub in Asia. It is also one of the most important capital hubs in the world. Approximately 1,500 family offices now operate from Singapore, with a combined assets-under-management figure that has grown by orders of magnitude over the last decade. The regulatory framework is sophisticated and stable. The talent pool is deep. The proximity to capital across South-east Asia, India, China, and the broader Asia-Pacific is structural. The wealth being booked through Singapore is increasingly global rather than only regional. For a platform like MAD, that combination of factors makes Singapore not just a useful market. It makes Singapore the natural next vehicle in the multi-jurisdiction architecture the platform is being built around. The Hong Kong feeder is established. The Singapore vehicle is in development. Together they form the Asia-Pacific layer of the global capital bridge that connects Australian innovation to the right pools of global capital. This article explains why Singapore matters, what the Singapore vehicle is being designed to do, and what the next chapter of the MAD platform will look like as the global architecture comes into operation. Why Singapore Several factors converge to make Singapore the right next jurisdiction for the platform. First, the family office concentration. Singapore has positioned itself, through deliberate policy and regulatory design, as the leading family office hub in Asia. The Variable Capital Company structure, the family office tax incentive schemes, and the broader investor framework have produced a concentration of sophisticated wealth that has few global parallels. The family offices operating from Singapore are increasingly active in real-economy categories, climate transition, food security, and biotech, the same categories that drive the MAD thesis. Second, the institutional ecosystem. Singapore is also the headquarters or regional base for many of the institutional allocators most active in Asia-Pacific. Sovereign wealth funds, large pension funds, multi-strategy institutional investors, and a deep ecosystem of professional service providers all operate from the same hub. For a platform deploying into Australian and broader Asia-Pacific real-economy companies, Singapore is the natural meeting point. Third, the regulatory framework. The Monetary Authority of Singapore has built a framework that is rigorous without being prohibitive. Wholesale fund structures, accreditation pathways, and cross-border arrangements are well-understood and well-supported. For investors who require structural integrity in the vehicles they participate in, Singapore offers exactly that. Fourth, the geographic and strategic position. Singapore sits at the centre of the Asia-Pacific story. The growth markets that matter for the next twenty years (India, Indonesia, Vietnam, the Philippines, Thailand, broader South-east Asia) are all within Singapore's natural orbit. Singapore-based capital deployed into Australian companies that are themselves expanding into these markets has structural advantages that capital from elsewhere does not. Capital that knows the markets you are expanding into is structurally different from capital that does not. From MAD platform thesis, 2026 What the Singapore vehicle is being designed to do The Singapore vehicle is in development, with structure, timing, and terms being finalised in consultation with regulatory advisers and prospective investors. The architectural intent is clear, even where specific terms are still being settled. The vehicle is designed to serve Singapore-based and broader Asia-Pacific institutional and family office investors who want exposure to MAD's deployment thesis under structures appropriate to their own jurisdiction. The underlying capital flows into the same Restoration, Transition, Transformation thesis that drives MAD Fund 1. The same diligence capability, the same operating bench, the same Compass methodology, the same Ambassador network. Investors participate in the same underlying deployment thesis, with the structural advantages of a Singapore-domiciled vehicle. What this means in practice is that a family office or institutional investor in Singapore can participate in the MAD platform without having to construct bespoke arrangements for each investment, navigate cross-border tax inefficiencies that direct investment would create, or accept the operational risk of investing in another jurisdiction without local diligence support. The vehicle does that work for them, at the structural level. What the family office audience is actually looking for Spending real time with Asian family offices, in Singapore and elsewhere, has clarified what they are actually looking for in the next phase of their portfolios. The pattern is consistent. They are looking for real-economy exposure rather than further allocation to public-market technology. The concentration risk in mega-cap technology is now visible, and the rotation toward real-economy categories has accelerated. They are looking for thematic alignment with the values of the next generation of family principals. Climate, food security, water, health, regenerative agriculture, philanthropic catalytic capital. These themes are increasingly the lingua franca of family-office decision-making, particularly in offices where second- and third-generation principals are now active in capital decisions. They are looking for income, not only growth. After a decade in which much of the family-office portfolio was allocated to growth equity and venture funds with long lock-ups and back-end weighted returns, the appetite for instruments that generate quarterly income during the life of the deployment has visibly grown. The 80/20 model, structured growth capital plus equity, is well-matched to this preference. They are looking for partners who can also help them deploy elsewhere. A relationship with the MAD platform is also a relationship with the operating bench, the Ambassador network, the assessment methodology, and the broader ecosystem. For family offices building out their own direct-investment capability, that relationship has value beyond the fund participation itself. And, increasingly, they are looking for catalytic vehicles. The Class B subordinated layer in MAD Fund 1, designed to absorb early risk in exchange for participation in residual upside, is the kind of catalytic structure that family offices with philanthropic intent are now actively considering as part of their broader giving and impact strategies. The bigger picture: a multi-jurisdiction capital architecture The Singapore vehicle is one node in a multi-jurisdiction capital architecture. The architecture, taken as a whole, is what makes MAD Global coherent rather than a list of separate products. Australia anchors the architecture, with MAD Fund 1 as the deployment vehicle, intended ESVCLP structural support that remains conditional on unconditional registration and continuing compliance, and the local team responsible for diligence and portfolio operations. Hong Kong is established, with a feeder vehicle that gives qualified investors from Hong Kong and Mainland China access to the same underlying deployment thesis under appropriate regulatory framework. Singapore is in development, designed to serve the family office and institutional ecosystem of Singapore and broader Asia-Pacific. Future jurisdictions will be considered as investor demand and regulatory pathways align. The Middle East family-office ecosystem, increasingly active in real-economy and climate categories, is a natural future addition. The European wholesale-investor ecosystem, particularly Switzerland and the United Kingdom, is another. The architecture is designed to expand without losing coherence, because the engines (the diligence capability, the operating bench, the Compass methodology, the Ambassador network) are shared across vehicles rather than rebuilt for each. The next chapter The next chapter of the MAD platform is the operationalisation of this multi-jurisdiction architecture. It involves three things in parallel. The first is the completion of the Singapore vehicle, with structure, terms, and regulatory pathway finalised, and first deployment in the Asia-Pacific allocator base. The second is the deepening of the Hong Kong feeder, with the existing investor base broadened, the operating relationships matured, and the deployment cadence into the Australian fund stabilised. The third is the maturation of the Australian fund itself, with the portfolio building, the early outcomes visible, and the platform-level engines (Venture Compass, Mastermind, Ambassador network, advisory) compounding around the deployment activity. Done well, the architecture that emerges is a capital platform that operates across multiple jurisdictions, with shared underlying intellectual property and diligence capability, deploying into the real-economy categories that the next twenty years will be defined by. That is the next MAD chapter. Singapore is not the whole story. But it is the natural next vehicle, and the moment to build it is now rather than later. The family office ecosystem there, the institutional concentration, the regulatory framework, the geographic position, the convergence of macro and structural shifts, all point in the same direction. The platform is being built to meet that moment. Read more about the platform architecture in the MAD book in our Books library. Singapore-based and broader Asia-Pacific family offices and institutional investors interested in early conversations about the Singapore vehicle are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## The Missing Middle URL: https://mad.vc/insights/the-missing-middle Published: 2026-04-26 Byline: By Mac Christopherson | MAD Ventures Category: Capital > Why growth-stage companies need better capital structures and deeper support, and where the structural opportunity sits for allocators. There is a category of company that the existing capital stack does not serve well. The companies in this category are post-revenue. They have proven business models. They have customers, traction, and capital efficiency. They are operating in real-economy sectors, food, energy, health, water, waste, manufacturing, materials, where the world is structurally short of investment. They have founders with industry expertise and prior high-growth track record. They are exactly the kind of company the world now needs more of. And they cannot find capital that fits. Banks do not lend to them; the risk profile is too high and the asset base too soft. Standard venture funds do not deploy into them; the return profile does not match the unicorn-and-bust model that justifies the venture structure. Private credit funds do not deploy to them; the equity component does not match the credit fund's return target. Growth equity buyers come in too late, at scale that no longer matches the company's stage. Family offices and high-net-worth investors increasingly want this category in their portfolios but have lacked instruments built specifically for it. That gap is the missing middle. It is the most important structural opportunity in capital markets that almost no one is talking about. The companies addressing major social and environmental challenges often sit between two capital worlds: too advanced for grant funding yet not sufficiently de-risked for conventional venture investment. From MAD Fund Philanthropic First-Loss Strategy, 2026 The shape of the gap To understand the missing middle, it helps to look at the existing capital stack from end to end. At one end sit grants and concessional capital. These instruments serve early-stage research, early commercial pilots, and ventures still establishing whether the technology works at all. They are appropriate for the stage they serve. They are not appropriate, and not designed, for companies that have already proven the technology and are now scaling commercially. Next come traditional venture funds. These instruments serve early-stage and growth-stage companies that fit the venture-software pattern: capital-light, exit-driven, optimised for hypergrowth, willing to accept dilutive equity capital in exchange for the operational support and pattern recognition the fund provides. The model works when the company fits the assumptions. It does not work, and produces predictable failure, when the company operates under different physics. Most real-economy companies in the missing middle operate under different physics. Beyond venture sit the growth-equity and late-stage private equity buyers. These instruments deploy at scale, often $20 million to $100 million per ticket, into companies that have already crossed the threshold of stable cash generation and predictable growth. By the time a company is ready for this layer, it has typically had to find its way through the growth phase using whatever capital was available, which has often meant the wrong instrument applied with growing distortion as the company scaled. Bank lending sits parallel to all of this, providing working capital, asset finance, and project finance for companies with the security profile and operating history banks require. Most growth-stage real-economy companies cannot meet that profile. What is missing, in this stack, is an instrument designed specifically for the company that is post-revenue, has proven its commercial model, has capital efficiency, and is now scaling toward a five- to seven-year horizon. The company that needs $2 million to $15 million per round, in a structure that combines income for investors with equity participation in upside, paired with operating support that the founders cannot easily access elsewhere. That is the missing middle. It is structurally underserved. And it is where most of the companies that will rebuild the systems the world depends on actually sit. Why it has been missing The missing middle has been missing for understandable reasons. The instrument that fits it is harder to construct than instruments at either end of the stack. A pure equity instrument is too dilutive for companies whose unit economics work, because those companies should not have to give up disproportionate ownership for capital they could service through cash flow. A pure debt instrument is too rigid for companies still scaling, because the debt service requirement collides with the growth investment cycle. The instrument that works is structured: part repaid through operating cash flows, part participating in equity upside, with covenants matched to commercial reality rather than to standard credit metrics. Constructing this kind of instrument requires capability that combines venture diligence with credit underwriting with operating support. It also requires fund structures that are willing to accept a different return shape: more income during deployment, less back-end-loaded equity at exit. And it requires deal-level work that is more intensive than either end of the stack: the structure of each deal has to be sized to the specific company, not standardised across a portfolio. All of this means the missing middle is a more difficult business to operate than either pure venture or pure credit. It is also more durable. The instruments produce income earlier, the underlying companies are operating businesses with cash flow, and the exit profile is broader because the companies are attractive to a wider range of acquirers. Why the missing middle matters now Three shifts make the missing middle more important now than it has been at any point in the last decade. First, the rotation of capital. The categories that drove the last decade's venture returns are repricing. Allocators are looking for places to redeploy. Real-economy categories with credible cash flows are now competing successfully for institutional capital. The supply of allocator demand for instruments that fit the missing middle has grown faster than the supply of instruments built for it. Second, the maturation of the underlying companies. A generation of real-economy companies (in agriculture, energy, water, biotech, materials) has now reached the post-revenue stage with proven commercial models. The pipeline of companies that fit the missing middle profile is the largest it has been in modern memory. The constraint is not the supply of qualifying companies. It is the supply of capital instruments structured to back them properly. Third, the structural pressure on the systems the world depends on. The food, energy, water, health, and waste systems require investment at scale to meet the demands of the next twenty years. Most of that investment will come from the post-revenue, growth-stage company layer that the missing middle serves. Allocators with conviction in this story are looking for the cleanest pathway to deploy capital against it. The missing middle is that pathway. You are investing in the engine, not just one fund. From MAD Group platform thesis, 2026 What the right instrument looks like The instrument that serves the missing middle has four characteristics. Structured. A meaningful share of the capital is repaid through the operating cash flows of the company, not through dilution at the next round. This produces income for investors during the life of the deployment. It also sequences the company's capital to its commercial reality. Equity-aligned. A modest equity sleeve preserves participation in long-term upside. The equity is the component that compounds across the multi-year arc; the structured component is what produces income along the way. Capability-paired. Capital alone is not what scales companies in the missing middle. The companies need operating support. The Venture Compass assessment, the VC Mastermind cadence, the Ambassador network, and the broader operating bench compound on the capital. Without the capability layer, the capital is not enough. With the capability layer, the capital becomes more productive than its dollar value would suggest. Patient and disciplined. Patient about the underlying multi-year story. Disciplined about quarter-by-quarter commercial reality. Both, in sequence, repeatedly. The instrument has to support that pattern of behaviour, not work against it. The 80/20 model that anchors MAD Fund 1 is built around these four characteristics. Structured growth capital plus equity sleeve. Operating support through the Compass and the Mastermind. Patient about the long arc. Disciplined about the quarterly distributions and operating performance. What this means for allocators For allocators, the missing middle is a structural opportunity at the asset class level. The supply of capital relative to the supply of qualifying companies is favourable. The category is real but underserved. The allocators who participate early in this layer compound across the cycle. The allocators who wait until the category is fully institutionalised will participate at lower returns and at scale that no longer requires conviction. The return profile of the missing middle is also structurally different from either pure venture or pure credit. The income during deployment compresses the J-curve. The equity participation preserves long-term upside. The diversification effect of holding a portfolio of post-revenue companies (rather than a portfolio of pre-revenue venture bets) reduces variance. The risk-adjusted return profile is, on the available evidence, better than the comparable return profile in either of the adjacent asset classes. And the underlying exposure is to companies operating in the categories the world needs more of: food, energy, health, water, waste, materials, manufacturing. Allocators who want their capital to compound over decades while doing measurable good in the categories they care about have, until now, lacked instruments built for that intent. The missing middle is where those instruments now sit. A closing note The missing middle is not a marketing phrase. It is a real structural gap in the capital stack, between grants and venture, between venture and growth equity, between bank lending and what banks will not lend on. The companies that fit this gap are the companies the world now needs. The instruments that fit this gap have been under-supplied for decades. Closing the gap is not optional. The systems the world depends on require it. Allocators looking for differentiated returns require it. Founders building the next generation of real-economy companies require it. That is what MAD Fund 1 is built to do. It is also why a platform architecture, rather than a single fund, is the right unit of construction. The missing middle is not a one-fund problem. It is an asset-class problem. Building the asset class is the work of the platform, not of any single vehicle inside it. Read more about the architecture in the MAD book in our Books library. Wholesale-qualified investors interested in the Information Memorandum for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Philanthropy as Amplifier, Not Charity URL: https://mad.vc/insights/philanthropy-as-amplifier-not-charity Published: 2026-04-26 Byline: By Mark Falzon | MAD Ventures Category: Philanthropy > How catalytic capital can attract larger pools of private and institutional capital, and what that means for the next century of giving. We are entering one of the largest intergenerational transfers of wealth in human history. Trillions of dollars will move into foundations, family offices, and donor-advised funds over the coming decades. The question is not whether the capital exists. The question is whether it will move, and what it will do when it does. The standard answer, the answer that has shaped most of modern philanthropy, is that the capital will be deployed as charity. It will fund programmes. It will support causes. It will respond to need. It will do good. And it will, mostly, exit the system once spent. That answer is not wrong. Charity has done extraordinary work. It has saved lives, built institutions, supported communities, and stood in for what markets and governments have failed to provide. The world is better for it. But the answer is incomplete. The scale of the challenges the next twenty years will require us to address (climate transition, food security, water systems, public health, the rebuilding of essential infrastructure) is far larger than the philanthropic capital available to address them, even at the largest scale that intergenerational transfer will produce. The arithmetic does not work. The philanthropic dollar, deployed as charity, can address only a fraction of what the systems the world depends on actually require. There is another way for philanthropic capital to operate. Not as charity. As amplifier. A relatively small amount of well-placed capital can unlock far larger pools of public, private and institutional investment. This is the amplifier effect. From Philanthropy as Amplifier, Mark Falzon, 2025 What catalytic capital actually does Catalytic capital is philanthropic or mission-aligned capital that is structured to absorb early risk in a way that brings senior commercial capital into a deal that would not otherwise happen. The mechanism is simple. Senior investors face risk-adjusted return targets that exclude certain ventures and certain sectors from their addressable universe. Catalytic capital takes the early risk position, behind the senior layer, and pays back only after the senior position has been made whole. The presence of the catalytic layer changes the risk profile of the senior position enough to bring it inside the senior investor's addressable universe. The result is a multiplier. A catalytic dollar attracts five to ten dollars of senior commercial investment that would not otherwise have flowed into the deal. The catalytic dollar is not lost, in the typical case it is recovered after the senior position is satisfied, but it is at-risk in a way that the senior dollar is not. The philanthropic capital does work that the senior capital could not do on its own, and the senior capital does work that the philanthropic capital could not do at scale. This is what philanthropy as amplifier means in practice. The same dollar, structured as charity, addresses the need it directly funds. Structured as catalyst, it addresses the need it directly funds, plus the need that the additional senior capital it brings in addresses. The amplifier ratio is conservatively five-to-one and frequently ten-to-one. Philanthropy stops acting as substitute. It becomes an ignition mechanism. How the structure works In MAD Fund 1, the catalytic capital layer is integrated directly into the fund deed as a separate unit class. The architecture is as follows. Class A units represent the institutional and private LP capital. Class A is the senior position, with first priority for capital recovery and the preferred return (BBSW + 5 percent annually). Class A is structured for institutional and family-office investors operating under standard wholesale-fund expectations. Class B units represent the catalytic philanthropic layer. Class B is sized at 5 to 10 percent of total fund capital. At a fund size of $100 million, that is $5 million to $10 million of catalytic allocation. Class B is subordinated to Class A in both risk and return. It absorbs first loss before any Class A capital is impaired. It receives no distribution until Class A has been made whole and has received the preferred return. Once those obligations are met, Class B may share in residual upside. Both classes operate under one Fund Deed, one Investment Committee, one quarterly reporting cycle, and one set of governance. The MAD Impact Advisory Board, chaired by Radha Kuppalli (former Managing Director, New Forests, $11Bn AUM), with Hector Mujica supporting, oversees the catalytic layer specifically. The integration into a single vehicle is the structural innovation; existing blended-finance structures typically separate philanthropic and commercial capital into different vehicles, with all the friction and inefficiency that creates. At a $100 million fund size, a $5 to $10 million philanthropic allocation generates a $90 to $95 million additional commercial deployment that would not otherwise have flowed into the same ventures. The multiplier is five to ten times. The catalytic layer is what produces it. Philanthropy stops acting as charity. It becomes the ignition mechanism that unlocks large-scale private capital. From MAD: What the World Needs Now Is a Little Madness, Mark Falzon, 2025, Chapter 8 What it amplifies The catalytic layer in MAD Fund 1 is sized to accelerate deployment into the categories the platform invests in. Food security. Energy transition. Environmental resilience. Health and education. Circular-economy ventures. The same companies the senior capital invests in. The amplification is in the volume of capital deployed and the speed at which it is deployed, not in a different deployment thesis. Three forms of amplification follow from the architecture. Capital amplification. Each philanthropic dollar de-risks and attracts multiple dollars of senior investment, expanding total impact capital while preserving disciplined return expectations for the senior layer. Impact amplification. De-risked capital accelerates investment into high-value sectors, food security, renewable energy, circular economy, health and education, where the gap between need and available capital is largest. The amplification is in measurable outcomes, not just in dollars deployed. Cultural amplification. Philanthropy becomes a structural catalyst inside enterprise capital, a measurable, transparent mechanism that converts generosity into scalable change. The cultural shift is from giving as substitute to giving as catalyst, with consequences that extend beyond the dollars themselves. Why this matters now Three factors converge to make catalytic capital more important now than it has been at any prior moment. The first is the scale of the wealth transfer underway. As assets move into the hands of the next generation of family principals, foundations, and donor-advised funds, the capital allocation patterns are changing. Younger principals are increasingly looking for instruments that combine financial discipline with measurable impact. Catalytic structures are exactly that combination. They are not pure giving. They are not pure investment. They are a structured way to do both at the same time, with multiplier effects on both dimensions. The second is the maturity of the surrounding capital stack. Twenty years ago, instruments like the catalytic class did not exist in usable form. The structures were experimental, the legal pathways were unclear, the pricing was ad hoc, and the operational support was limited. Today, the structures are well-established, the legal pathways are clear, the pricing is anchored in real precedent, and the operational support is professional. The infrastructure for catalytic capital has matured to the point where it can be deployed at scale. The third is the urgency of the underlying problems. The food, energy, water, health, and climate-transition systems the world depends on need investment at a scale that pure philanthropy cannot match and pure commercial capital will not yet underwrite without the catalytic layer. The arithmetic only works when the two are combined. The next twenty years will be defined, in significant part, by whether the architecture of catalytic capital scales to meet the moment. What the architecture is being built around The MAD catalytic layer is in active design. It is being built around several principles. Single vehicle, not parallel vehicles. The Class A and Class B units sit inside the same Fund Deed. There is no parallel philanthropic vehicle to negotiate, no separate diligence process, no separate governance. The catalytic layer is integrated into the fund itself, with the simplicity and efficiency that produces. Transparent governance. The MAD Impact Advisory Board oversees the catalytic layer. The Board is chaired by Radha Kuppalli, who brings the institutional impact-investing track record from her time as Managing Director at New Forests, with $11Bn AUM. Hector Mujica, with his background in philanthropic capital and impact strategy, supports the Board. Quarterly reporting under the MAD Impact Framework provides ongoing visibility for catalytic investors. Recoverable, not consumed. The Class B layer is at-risk capital, but in the typical case, after Class A is satisfied, Class B is fully recovered and may share in residual upside. The catalytic dollar is not gone in the way that a charitable gift is gone. It does the work of attracting senior capital, and then in most scenarios returns to the philanthropic source for redeployment. Aligned with sectors of structural need. The catalytic layer accelerates deployment into food, energy, water, environmental resilience, and circular-economy categories where the gap between need and available capital is structural rather than cyclical. Designed for foundations and aligned philanthropic partners. The architecture is being developed in conversation with potential philanthropic partners. The intent is for the layer to operate as the catalytic infrastructure that mid-sized and larger foundations have lacked, sized small enough to accommodate first-time catalytic allocators and structured rigorously enough to satisfy institutional foundations. A closing note on philosophy There is a philosophical observation worth making at the end of this argument. The framing of philanthropy as amplifier rather than charity is not a rejection of charity. Charity has done, and continues to do, extraordinary work. The framing is an addition to charity, not a replacement of it. What it adds is the recognition that the same dollar, structured differently, can do different work. Some philanthropic dollars are best deployed as gifts, in places and ways that no commercial capital will ever underwrite. Some philanthropic dollars are best deployed as catalyst, in places where commercial capital is sitting on the sidelines waiting for the risk position to change. The art of philanthropy in the next century will be in knowing the difference, and in deploying both forms of capital with discipline. The architecture of the MAD catalytic layer is built for the second case. It is one component of what philanthropy can become when it is structured to amplify rather than only to give. It is also one of the cleanest practical examples of what an integrated capital platform can do that single-thesis funds cannot. The next century will be defined, in significant part, by what philanthropic capital chooses to be. Charity will continue, and should. Amplification is what makes the arithmetic of the larger problems work. Both are required. The architecture exists. Read Mark Falzon's book Philanthropy as Amplifier, with foreword by Hector D. Mujica (ex-Google.org, former Head of Economic Opportunity for the Americas and architect of the Google Career Certificates Fund), in our Books library. Foundations and aligned philanthropic partners considering catalytic deployment into the MAD architecture are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## What World Will We Choose to Finance? URL: https://mad.vc/insights/what-world-will-we-choose-to-finance Published: 2026-04-26 Byline: By Mark Falzon | MAD Ventures Category: Editorial > A short essay on the question that sits underneath every capital decision being made today, and the answer the next decade will require. Capital is not passive. It is an active choice. It is architecture, and it builds the future the world will operate in. The deployment that happens this year, and next year, and over the decade that begins now, will determine what kind of world exists at the end of it. The question is not whether the deployment is happening. It is. At scale. Every day. By the largest pools of institutional and private capital ever assembled in human history. The question is what world that deployment is building. That sentence sounds like rhetoric. It is not. It is the most concrete and most consequential question any allocator with serious capital can ask, and at the moment, almost no one is asking it directly. The convention of the industry is to treat the question as someone else's. The investor optimises for risk-adjusted return. The fund manager optimises for fund performance. The board optimises for governance compliance. The committee optimises for the policy parameters set above it. The world that emerges from the sum of these optimisations is, in some sense, no one's decision. It is the residual of millions of small decisions, each defensible inside its own frame, each indifferent to the larger frame they are collectively constructing. The next ten years are not going to permit that indifference. The reasons are converging. Capital is not passive. It is an active choice. It is architecture, and it builds the future the world will operate in. From MAD Group platform thesis, 2026 What is converging Five things, simultaneously, are forcing the question into the open. The systems the world depends on are under measurable pressure. Food security is fragmenting. Energy systems are mid-transition and short of investment. Water infrastructure is breaking down across both the developing and the developed world. Health systems are buckling under demographic shift. Waste streams are accumulating faster than the planet processes them. None of these is a future problem. All of them are present problems, with present consequences, that the existing capital architecture is not yet adequately addressing. The capital available to address them is, however, enormous. Foundations hold endowments measured in trillions. Family offices have grown into a class of capital larger than most sovereign wealth funds. Pension capital is at historic scale. The next twenty years will see one of the largest intergenerational transfers of wealth in recorded history. The arithmetic of capital availability versus systemic need is not the constraint. The architecture of capital deployment is. The asset class that absorbed most of the last decade's growth capital is being repriced. The categories that defined venture capital between 2010 and 2024, software-led, capital-light, exit-driven, are facing structural headwinds as foundation-model capability commoditises the moats most of those companies were built around. The capital that flowed into those categories is, increasingly, looking for somewhere else to compound. Where it goes will shape the next decade. AI is reorganising labour, productivity, and value across the economy at a speed and scale that nothing in modern memory matches. Conservative consensus, not the most aggressive timelines, projects the largest labour-market shift since the industrial transition that built modern cities. The effect of that reorganisation is to make the underlying physical systems, the food, the energy, the health, the water, the waste, more important in absolute terms even as they become a smaller share of nominal output. The investment thesis that follows is not subtle. It is also not yet priced in. And the cultural and generational appetite for capital with purpose has shifted, decisively, in the last five years. The next generation of family principals, foundation trustees, and institutional decision-makers are not asking the same question their predecessors asked. The previous generation asked: how do I produce a defensible return? The next generation asks: how do I produce a defensible return on a planet I want to leave behind? The two questions are not the same. The instruments that answer the second one are different from the instruments that answer the first. The choice that follows From the convergence of these five forces, a choice emerges that no allocator with serious capital can permanently avoid. The first option is to keep optimising the existing architecture. To deploy capital into the categories that produced the last decade's returns, in the structures that produced them, on the assumption that the patterns will continue. The argument for this option is the inertia of large institutions. It is the path of least friction. It also assumes that the underlying conditions of the last decade are durable. The available evidence does not support that assumption. The second option is to redirect capital toward the architecture the next decade actually requires. To fund the companies that are rebuilding the systems the world depends on. To structure capital that fits the commercial reality of those companies rather than the speculative reality of the last cycle. To pair capital with the operating support and the catalytic structures that make scale possible. To do this not as charity, not as concession to social pressure, but as the highest-conviction, best-risk-adjusted use of capital available in the period. Neither option is morally simple. The first is not callous. The second is not virtuous. Both are, in their own logic, defensible. The real question is which one the underlying structural reality will reward over the next decade. On the available evidence, that is the second one. The capital architecture that aligns with the systems the world depends on, in the period when the world is repricing those systems, will compound. The architecture that does not will be the one that gets repriced. It is more than enough to drive this entire thesis: even the most moderate, conservative consensus points to the largest labour-market shift since we all moved into cities. From MAD platform thesis, 2026 What this looks like in practice The choice does not require certainty about which company will produce the highest return. It requires only the willingness to allocate against the architecture the next decade is going to operate under, rather than against the architecture the last decade did. In practice, that means real-economy deployment rather than further allocation to speculative software categories. Structured capital that pays back through operating cash flow rather than only through speculative exit. Catalytic structures that bring philanthropic and commercial capital into the same vehicles, with measurable multiplier effects on the dollar deployed. Multi-jurisdiction architecture that connects capital pools to the companies most starved of structured deployment. Operating support paired with capital, because capital alone is not what scales companies. Patience matched to the underlying multi-decade arc of physical and biological systems. Almost none of these characteristics is what the existing capital stack provides. Almost all of them are what the next decade will require. That gap, between the architecture that exists and the architecture the world now needs, is the work. Closing it is not optional, and it is not abstract. It is the practical, deployable, day-to-day work of designing capital that fits the systems the world actually depends on. That is what MAD is built to do. It is also, in the end, the only honest answer to the question this essay opens with. A closing note The question of what world we choose to finance does not require an immediate revolution. It requires only that the question is asked, openly, by the people deploying capital. Not by them alone, and not as a substitute for the discipline of risk-adjusted return, but alongside it, as the larger frame inside which return-seeking takes place. The conversation that follows from asking the question is the most useful conversation an allocator can have right now. It is also the conversation that the next generation of family principals, foundation trustees, and institutional decision-makers are increasingly insisting on. The architecture that emerges from that conversation will look different from what the last decade produced. The next decade will be defined by it. Capital is architecture. The world that exists at the end of this decade will have been built by the architecture chosen at the start of it. There are not many decisions inside the daily practice of allocation that are this consequential. There are also not many that are this clarifying when they are taken seriously. The question is what world we choose to finance. The answer is the work. Read more about the MAD platform architecture in the MAD book in our Books library. Wholesale-qualified investors interested in the Information Memorandum for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## Blended Finance at the Inflection URL: https://mad.vc/insights/blended-finance-at-the-inflection Published: 2026-04-26 Byline: By Mark Falzon | MAD Ventures Category: Philanthropy > What the 2024 data tells us about the maturation of catalytic capital, and what the underdevelopment of philanthropic deployment in particular says about the structural opportunity ahead. Once a year, Convergence (the global network for blended finance and the most authoritative source of market data on the field) publishes its State of Blended Finance report. The 2025 edition, covering the 2024 calendar year, is now available. The data it contains is worth reading carefully, particularly for institutional and philanthropic capital allocators considering how to deploy in the period ahead. A few headline findings establish the shape of the market. Blended finance flows totalled $18.3 billion in 2024 across 123 closed deals. That is below the record-high $23.1 billion of 2023, but well above the $14.3 billion of 2022, suggesting that 2023 was not a one-off spike but part of a broader upward trend. The annual market average over the past five years has grown from $11.5 billion in 2020 to $18.3 billion in 2024, an average annual increase of $1.7 billion. Median deal size has increased substantially. From $38 million across the 2020 to 2023 period, to $65 million in 2024. Three transactions in 2024 exceeded $1 billion. The market is becoming larger and more institutional, not smaller or more cottage. Climate continues to dominate the deployment thesis. 49 percent of all 2024 blended-finance deals were climate-focused, accounting for over 62 percent of total financing. The convergence of climate and capital is not a future trend. It is the present shape of the market. And, perhaps most significantly for the structural argument that follows: commercial capital from private-sector investors outpaced Development Finance Institutions and Multilateral Development Banks in capital deployment for the first time, with $6.9 billion in private-sector commitments in 2024. Among private investors, the share of commitments from commercial banks and other financial intermediaries increased from 45 percent in 2022 to 55 percent in 2024. The market is maturing. The institutional infrastructure is real. The deal sizes are large enough to absorb meaningful institutional commitments. The thesis that catalytic capital can produce systemic outcomes at scale is no longer theoretical. The data is in. A 5 to 10 percent philanthropic allocation produces a 5 to 10 times multiplier, mobilising up to 95 million dollars in additional senior investment. From MAD Fund Philanthropic First-Loss Strategy, 2026 The philanthropic gap Inside the headline numbers sits a more interesting structural finding. Despite the maturation of the market, philanthropic capital represents only 3 percent of total investor commitments in blended finance. That share has actually declined over the past three years, from 6 percent in 2022 to 3 percent in 2024. Total philanthropic commitments to blended-finance transactions over the three years to 2024 were approximately $100 million, against a total market that closed $55 billion of deals over the same period. In other words: the most catalytic class of capital, the class that on a structural basis is best positioned to absorb early risk and produce the multiplier effect that brings institutional capital in behind it, is deploying at a fraction of its potential. The Convergence report is unambiguous on this point. Foundations have, in their own words, "a higher risk tolerance, longer time horizons, and fewer constraints across asset classes" than other investor categories. They are structurally well-suited to provide catalytic capital. They are not yet doing it at scale. The reasons are partly structural and partly cultural. Structurally, the instruments that allow foundations to deploy programmatic capital into catalytic positions inside commercial-grade vehicles have been limited. Most blended-finance vehicles separate philanthropic capital from commercial capital into different vehicles, with all the friction that creates. Foundation diligence processes, governance structures, and reporting expectations were built around grant-making rather than around investment. The infrastructure for catalytic deployment has had to be retrofitted, and it has not yet caught up to the demand. Culturally, the framing of philanthropy as charity rather than as catalyst has been slow to shift. The dominant logic of foundation deployment, for most of the modern philanthropic era, has been to give. To fund programmes. To support causes. To respond to need. That logic has produced extraordinary outcomes and continues to. It is also a logic that, on its own, cannot match the scale of the systemic challenges the next twenty years require addressing. The shift from charity to catalyst is not a rejection of charity. It is an addition to it. Both are required. Foundations have a higher risk tolerance, longer time horizons, and fewer constraints across asset classes. These are attributes that make them well-suited to invest in opportunities deemed high risk. From Convergence, State of Blended Finance 2025 The four themes Convergence identifies The Convergence report identifies four themes that have remained the persistent bottlenecks to scaling blended finance over the past five years. Each is worth naming directly, because each maps to a structural opportunity for the architecture of MAD's catalytic capital layer. Theme one: lack of a private-sector mobilisation strategy. Donors and concessional capital providers have not consistently prioritised mobilising private capital as a deliberate strategy. The result is that catalytic capital, when deployed, often operates in isolation rather than as part of a coordinated plan to bring institutional capital in behind it. The architectural answer to this gap is exactly what catalytic-by-design vehicles like MAD Fund 1's Class B layer are built to provide. The catalytic dollar is not deployed alone. It is deployed inside a structure that is engineered to attract the senior commercial capital it brings in. Theme two: local investment is underrepresented. Local capital, regional investors, and domestic institutions remain a small share of blended-finance flows. The Convergence data shows local investors at 17 percent of total commitments, mostly on commercial terms. The architectural answer here is multi-jurisdiction capital architecture: vehicles structured for participation by local investors under regulatory frameworks appropriate to their jurisdiction. The MAD Global architecture (Hong Kong feeder established, Singapore vehicle in development, future jurisdictions to follow) is built around this principle. The platform deploys into Australian companies; the participation pathways are local to the investor. Theme three: lack of transparency. Blended-finance activity is structurally under-reported. Concessional capital providers rarely share financial terms or post-investment outcomes publicly, which limits the evidence base supporting blended finance as a development tool. The architectural answer is integrated reporting: catalytic capital that sits inside the same Fund Deed as commercial capital, with the same governance, the same reporting cadence, and the same transparency obligations. The MAD Impact Framework, with quarterly reporting overseen by the Impact Advisory Board, is designed for this. Theme four: the ecosystem remains underdeveloped. Sustainable Development Goal-aligned projects are often too small to absorb scaled investment, and there is limited repetition or standardisation across the market. The structural answer is platform-level architecture: not single-fund vehicles built for individual transactions, but operating platforms that deploy the same diligence capability, the same operating bench, the same assessment methodology, and the same governance across multiple deals and multiple jurisdictions. Standardisation reduces friction. Repetition produces the data that supports the next round of allocation. Both are built into the platform model rather than into the single-fund model. What follows from the data Three things follow from the 2025 Convergence findings, taken in combination. The first is that the market is real, large, and growing. $18.3 billion in 2024 deal volume, against a $11.5 billion baseline in 2020, demonstrates structural rather than cyclical expansion. The infrastructure for blended-finance deployment at institutional scale has matured. Allocators considering the category for the first time are not late. They are entering at the moment when the market's scale and institutional credibility are crossing the threshold that justifies meaningful commitment. The second is that philanthropic capital is, by the data, the most underutilised class of capital in the system relative to its catalytic potential. The deployment ratio is roughly half what it was three years ago. The tailwinds are present (intergenerational wealth transfer, next-generation principal preferences, maturation of catalytic instruments). The infrastructure to deploy is there. The capital is there. The deployment, currently, is not. That gap is itself a structural opportunity. The third is that the architectures that will close the gap most effectively are platform-level, not fund-level. The four themes Convergence identifies (mobilisation strategy, local participation, transparency, ecosystem development) are not fund-level problems. They are asset-class-level problems. The vehicles that solve them are platforms that deploy the same operational capability across multiple funds, jurisdictions, and capital classes, with integrated reporting and standardised governance. That is a description of the architecture MAD is built to be. It is also the architecture the next phase of blended finance will require if it is to scale to the levels the systems the world depends on actually need. A closing note The Convergence 2025 report is, on the whole, an encouraging document. It documents a market that is maturing, that is increasingly attractive to private commercial capital, that has demonstrated countercyclical resilience through macro volatility, and that is producing larger and more sophisticated deals over time. It also documents the persistent gaps that limit the market's ability to scale to the level the underlying need requires. For allocators considering catalytic capital deployment for the first time, the data suggests that the moment to participate is now rather than later. The infrastructure has matured. The instruments are credible. The structural opportunity is large. And the philanthropic deployment ratio is structurally low relative to potential, which means the marginal philanthropic dollar deployed today produces an outsized effect compared to the same dollar deployed at any point in the past decade. The architecture exists. The data validates the thesis. The work, now, is the deployment. Read the full Convergence State of Blended Finance 2025 report at convergence.finance. Read more about the MAD catalytic capital architecture in Mark Falzon's book Philanthropy as Amplifier (foreword by Hector D. Mujica, ex-Google.org) in our Books library. Foundations and aligned philanthropic partners considering catalytic deployment into the MAD architecture are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. --- ## When Venture Capital Lost the Plot URL: https://mad.vc/insights/when-venture-capital-lost-the-plot Published: 2026-04-26 Byline: By Mark Falzon and Mac Christopherson | MAD Ventures Category: Capital > The Compass answer to a decade of lazy pattern-matching, and what the academic research now confirms about how the best investors actually decide. Half of all venture capital investments could be identified, before the cheque is written, as worse than putting the same money into the public market. That is not a polemical claim. It is the published finding of a 2022 University of Chicago study that ran a machine-learning model across 16,000 startups and over $9 billion of committed capital. The cost of the predictably bad half, in the dataset alone, was more than $900 million. The cost across the wider industry, year on year, is structurally higher. The reason this happens is not what most allocators assume. It is not that the future is unknowable, or that venture is a power-law game where most bets are supposed to fail. The reason is more specific. The single decision factor most venture capitalists rely on most heavily, the read on the founder, is also the factor most likely to produce the bad investments. The pattern-matching that drives the worst decisions is the same pattern-matching the industry has come to celebrate as judgement. The Venture Compass exists because there is a more rigorous way to make this decision. Eight forces, evaluated together, with the founder as one of them rather than the proxy for all of them. This article is about why the standard model produces the failures it does, what the academic research now confirms, and what the Compass does differently. To explain why founder-first thinking became the industry default in the first place, we have to start with a story. How the founder-first frame won In 1957, eight researchers walked out of Shockley Semiconductor and into the offices of a young San Francisco banker named Arthur Rock. They wanted to start a rival firm. Rock saw something in them and helped them secure financing for what would become Fairchild Semiconductor, the company generally credited with seeding Silicon Valley. Rock became the first modern venture capitalist. His conviction, repeated across decades of practice, was that backing people was the core of the business. A great team, he liked to say, can find a good opportunity even if they have to jump from the market they currently occupy. Rock's contemporaries saw it differently. Tom Perkins at Kleiner Perkins focused on the technology, asking whether it was proprietary and meaningfully better than alternatives. Don Valentine at Sequoia became obsessed with the market itself, reasoning that a sufficiently large market could carry a mediocre team. The three philosophies coexisted, productively, for a generation. Rock's framing won. Not because the data supported it more than the others, but because "venture capital is a people business" makes an excellent slogan, puts the founder at the centre of the story, and gives capital allocators a clear purchase deck to sell to the next round of LPs. Today, virtually every venture firm presents itself as founder-first. The framing has been hollowed out by everything that came after it. What the data actually shows In 2016, four economists (Paul Gompers, William Gornall, Steven Kaplan, and Ilya Strebulaev) published what remains the most thorough analysis of venture capital decision-making ever conducted. They surveyed 885 institutional venture capitalists at 681 firms. The headline finding became industry orthodoxy: 95 percent of firms identified the management team as an important factor, and 53 percent identified it as the single most important. Business model and product, the territory Perkins worked in, were selected as most important by roughly 10 percent. Market and industry, Valentine's territory, by about 6 percent. That looks, on its face, like vindication of the Rock view. But the same paper's authors, and the work that has built on it, point in a different direction. Diag Davenport's 2022 study, the one referenced at the top of this article, is the most direct evidence. By comparing real investor choices against a machine-learning model trained on the same information available at the time of decision, Davenport showed that approximately half of investments were predictably bad before they were made. Then he did something more revealing. He trained two parallel models, one to predict the best outcomes and one to predict the worst. The model that predicted good investments leaned on product characteristics. The model that predicted bad investments leaned heavily on the founder's background, especially educational pedigree. When investors were making good decisions, they were looking carefully at the idea. When they were making bad decisions, they were looking carefully at the team. A separate body of research, summarised by Andrew Zacharakis and G. Dale Meyer, suggests the deeper problem. Even sophisticated venture capitalists struggle to introspect about their own decision process. They operate on intuition, articulate that intuition as judgement about people, and lack the structured mechanism to test whether their intuition is producing returns or producing pattern-matching that compounds error. The Gompers data corroborates this directly: 9 percent of venture capitalists in the survey admit to using no financial metrics in their decision process at all. Among early-stage investors, the figure rises to 17 percent. An industry that relies this heavily on qualitative judgement might be expected to have thought carefully about its judgement criteria. The data suggests it has not. This is the trap. Founder-first thinking, applied superficially, has produced an industry that overweights pedigree, charisma, and prior fundraising success, and underweights the substance of what the founder is actually building. The founders who fit the pattern get funded. The pattern feeds the next round, which feeds the round after that. The quality of returns has declined while capital velocity has accelerated. Daniel Kahneman called this the hazards of confidence: even sophisticated professionals can be seduced by simple, coherent ideas if they are aligned with the right incentives, even when those ideas produce obviously bad results. The statistical evidence of our failure should have shaken our confidence in our judgments of particular candidates, but it did not. We knew as a general fact that our predictions were little better than random guesses, but we continued to feel and act as if each particular prediction was valid. From Daniel Kahneman, Don't Blink! The Hazards of Confidence The paradox of the great investors If founder-first thinking is structurally flawed, the best venture firms in the world should be exhibits for the prosecution. Most of them are aggressively founder-first. Founders Fund has spent two decades backing unusual people before anyone else would. Y Combinator has run for twenty years on the premise of identifying great founders. Yet they are not exhibits for the prosecution. They are among the best performers in the industry. Which means the founder-first framing is not the problem. The shallow application of it is. Asked at the DealBook Conference how he evaluated founders, Peter Thiel was direct. He cannot, he said, separate the ideas and the business strategy and the technology that much from the people. It is, in his words, all some sort of a complicated package deal. He cannot assess a founder without assessing the idea, and cannot assess the idea without understanding the way the founder has shaped it. The two are inseparable. Sam Altman, addressing a Khosla Ventures summit in 2016, said the same thing in different words. The traits he looks for, in order, are determination, clarity of vision, communication skills, and "the non-obvious brilliance of the idea." Notice the framing. Not the brilliance of the founder. The brilliance of the idea, which the founder has chosen and shaped. The most rigorous version of this argument has been made by academia. In a 2022 paper published in the Journal of Business Venturing Design, Mattia Bianchi and Roberto Verganti at the Stockholm School of Economics and the Politecnico di Milano argue that entrepreneurship has been systematically misunderstood as an exercise in problem solving when it is in fact, primarily, an exercise in problem finding. The founder's most important creative act is the identification and framing of a problem worth solving. Everything else, the pitch deck, the go-to-market plan, the product road map, follows from the quality of that initial framing. If Bianchi and Verganti are right, the jockey-versus-horse debate is a false dichotomy. The founder cannot be assessed without the problem they have chosen. The problem cannot be assessed without the way the founder has framed it. The two illuminate each other. Any investor who claims to assess them separately is doing neither well. Nabeel Hyatt at Spark Capital captures this in operational language. The way Spark separates real executors from people who simply pitch well, he has said, is to look at what comes out of the founder's hands. The product is the manifestation of the founder's ambition, and a deep reflection of their judgement, their priorities, and the problem they have chosen to solve. An investor who says "I invest in people" and has not looked carefully at the product is either investing in shallow patterns or in charm and charisma. Those are precisely the habits which reliably produce predictably bad investments. Finding meaningful problems to address is a critical driver of innovation and entrepreneurship in today's turbulent environment, possibly even more so than problem solving. From Bianchi and Verganti, Entrepreneurs as Designers of Problems Worth Solving, 2022 What this means for the Compass The Venture Compass was developed before this body of academic research crystallised, but it was built around the same recognition. The reason ventures succeed or fail is rarely a single factor. It is the coherence between the eight forces that shape the venture's trajectory: Market Validation, Market Forces, Growth Model, Capital Strategy, Structure, Culture, People, and Integration. Each of those forces is real. None of them, alone, predicts the outcome. Eight forces, evaluated together, are the operational answer to what Bianchi and Verganti describe theoretically and what Thiel and Altman articulate intuitively. The founder is one force in a system of eight. The product, the problem framing, the market dynamics, the capital architecture, the structural design, the operating culture, the integration into the world the company exists inside, all of them sit alongside the founder, and the venture's trajectory is determined by the interaction between them. The X Factor at the centre of the Compass is the structural consequence of the eight forces working together. As we have written elsewhere, the X Factor is not mysterious. It is the natural outcome of alignment. When the forces are coherent, the X Factor is present and the company carries the quality investors call inevitable. When they are not, the X Factor is absent, and even strong individual forces produce fragility. This is the discipline that protects against pattern-matching. A founder with the right pedigree but with a Capital Strategy mismatched to the company's commercial reality will burn through capital that is structurally wrong for the business. A founder operating in a market with strong tailwinds (Market Forces) but without the structural integrity (Structure, Culture) to absorb scale will scale into collapse. A founder with extraordinary product instincts (Market Validation) but without the operating bench (People) to extend the vision will plateau at the point where the founder's individual capacity becomes the constraint. The Compass holds eight forces in view at the same time, deliberately, because that is the only honest way to answer the question Davenport's data raises: which investments are predictably bad, and how do we stop making them? A clear Gap makes investment decisions coherent. A distorted Gap misprices the journey. From The Venture Compass, Falzon and Christopherson, 2025 A closing note The Rock view is not wrong. Backing people remains the core of the work. But there are two things an investor can mean when they say they invest in people. The first is the belief that pedigree, biography, charisma, and prior fundraising signal carry more meaning than the substance of what the founder is building. The data is now clear that this view produces predictably bad investments. The second, harder version is the belief that the founder cannot be evaluated separately from the problem they have chosen, the idea they have framed, the structure they are building inside, the capital they have selected, the culture they are forming, and the system they are integrating into. That is the Compass. Eight forces, the X Factor, and the Gap between current reality and potential reality, evaluated together. It is the discipline that translates the founder-first instinct into something rigorous enough to allocate capital against, and patient enough to compound across the multi-decade arc that real-economy companies actually require. Founder-first is the slogan. Coherence-first is the practice. The difference between the two is, on the available evidence, the difference between the half of venture investments that compound and the half that should never have been made. The Compass exists to keep capital on the right side of that line. Read more about the assessment methodology behind this analysis in The Venture Compass, available in our Books library. Wholesale-qualified investors interested in the Information Memorandum for MAD Fund 1 are welcome to enter the Investor Room. Information for eligible Australian wholesale clients and US accredited investors only. This paper is general commentary and does not constitute financial, tax, legal, investment, or other professional advice. It does not take into account the objectives, financial situation, or needs of any person. It does not constitute an offer of securities or an invitation to subscribe. Any investment opportunity referenced is offered privately and only to wholesale clients as defined under sections 761G and 708(8) of the Corporations Act 2001 (Cth), and to eligible US accredited investors under applicable US law, under separate offer documentation. Past performance is not a reliable indicator of future performance and capital is at risk. MAD Fund 1 is intended to be registered as an Early Stage Venture Capital Limited Partnership (ESVCLP); registration is currently conditional and the tax concessions described depend on unconditional registration and continuing compliance. Legislation may change. Prospective investors should obtain their own independent financial, legal and tax advice before making any investment decision. Nothing on this page should be relied on as a substitute for the Information Memorandum and Partnership Deed, available on request to eligible investors via the Investor Room. ---