The named instruments — and the working vocabulary. Defined here.Die benannten Instrumente — und das Arbeitsvokabular. Hier definiert.
Two tiers. Six canonical instruments coined for the discipline of Capital Architecture, each with example and counter-example. Plus a 50-term field reference covering capital structuring, structured finance, venture building and fund mechanics — the working vocabulary that recurs in every CA mandate.
Zwei Ebenen. Sechs kanonische Instrumente, geprägt für die Disziplin der Capital Architecture, jeweils mit Beispiel und Gegenbeispiel. Plus eine 50-Begriffe-Feldreferenz zu Capital Structuring, Structured Finance, Venture Building und Fund Mechanics — das Arbeitsvokabular jedes CA-Mandats.
CACapital ArchitectureCapital Architecture
The discipline of structuring capital where market templates do not yet exist. Vehicles, mandates, collateral frames, waterfall mechanics and co-investment architectures, designed for problems the market has not yet learned to finance. Sits next to — not within — impact finance, blended finance and generalist advisory. Its own discipline, with its own coined methodology.
Example: a thirty-year placemaking real-asset structure cannot use a closed-end fund template; the architecture is the vehicle logic that allows pension capital, family-office capital and DFI capital to co-exist in one structure across thirty years.
Not to be confused with: impact finance (which commits to outcomes), blended finance (which stacks return classes), or generalist advisory (which selects from existing vehicles). Capital Architecture is upstream of all three.
Read further: the discipline page · essay · Structure precedes capital
Die Disziplin der Kapitalstrukturierung, wo Marktvorlagen noch nicht existieren. Vehikel, Mandate, Sicherheitenrahmen, Waterfall-Mechanik und Co-Investment-Architekturen für Probleme, die der Markt noch nicht zu finanzieren gelernt hat. Steht neben — nicht in — Impact Finance, Blended Finance und generalistischer Beratung. Eine eigene Disziplin mit eigener Methodik.
Weiterlesen: die Disziplin-Seite
CCFCreative Capital FormationCreative Capital Formation
The active practice of Capital Architecture. Architecture is the noun — what shape the structure takes. Creative capital formation is the verb — how the structure actually gets assembled, closed, and held together over years. The two terms describe the same discipline from different angles.
Example: a sovereignty-driven energy mandate that ends as an evergreen Liechtenstein vehicle with a 10-year secondary-liquidity option, AIFM-partnered out of Lux. The vehicle is the architecture; the assembly is the formation.
Not to be confused with: standard capital formation (IPO desks, syndicated loans, closed-end funds for known shapes). The adjective — creative — is the load-bearing one.
Read further: the active-practice section
Die aktive Praxis von Capital Architecture. Architektur ist das Substantiv — welche Form die Struktur annimmt. Creative Capital Formation ist das Verb — wie die Struktur tatsächlich zusammengefügt, geschlossen und über Jahre gehalten wird.
MCMandate CartographyMandate Cartography
The systematic mapping of an allocator's mandate against the structure of a candidate opportunity, before instruments are named. Each plausible allocator is recorded against four operative questions: policy boundary, risk-grid cell, liability profile, decision authority and cadence. Twenty cells, four columns, one page. The map determines the shape of share classes, hurdles, lock-ups, jurisdiction and AIFM partner.
Example: ten plausible LPs map onto three structural clusters — DFI anchor needing concessional first-loss, commercial-pension cohort needing senior fixed income, family-office cluster wanting equity upside. Three share classes. The vehicle is a function of the map.
Not to be confused with: a target list of LPs. The target list answers who do I know; the map answers what is the shape of the structure that lands.
Read further: essay · Mandate Cartography
Die systematische Kartierung des Mandats eines Allokators gegen die Struktur einer Opportunität, bevor Instrumente benannt sind. Vier operative Fragen: Policy-Boundary, Risk-Grid-Zelle, Liability-Profil, Entscheidungsautorität und Kadenz. Die Karte ist die Struktur.
MMMobilisation MultiplierMobilisation Multiplier
The ratio of commercial capital deployed at financial close to concessional capital committed. Computed at close, not at intent. Uses commercial capital actually deployed, not committed-subject-to-conditions. Counts only concessional capital that bears first loss or equivalent.
Example: a 16% concessional first-loss layer mobilising 84% senior commercial = 5.25x. Real-world median across published blended-finance structures sits around 2.5x (Convergence Finance data). Above 5x = engineered. Below 1.5x = subsidised commercial finance with a different cover page.
Not to be confused with: announced or structured leverage. The Multiplier is realised, audited at close.
Read further: essay · Minimum Concessionality · methodology section
Das Verhältnis von kommerziellem Kapital, das bei Financial Close eingesetzt wird, zu konzessionärem Kapital, das gebunden wurde. Berechnet beim Close, nicht bei Intent.
MnCMinimum ConcessionalityMinimum Concessionality
The discipline of using the smallest layer of concessional capital required to make a structure investable. Three operative tests: necessity (would commercial capital move without it?), sizing (what is the smallest layer that crosses the threshold?), and form (first-loss, guarantee, subordinated debt, hedge subsidy, TA grant). The readout is the Mobilisation Multiplier.
Example: a DFI offered up to 30% first-loss on a peatland-credit vehicle; allocator dialogue showed senior commercial would clear at 12% with the right collateral structure. Taking 12% produced 7.4x mobilisation. Taking 30% would have produced 2.3x. The discipline is the optimisation.
Not to be confused with: minimal blending, or rejecting concessional capital. The discipline is finding the threshold, not avoiding it.
Read further: essay · Minimum Concessionality
Die Disziplin, die kleinste Schicht konzessionären Kapitals einzusetzen, die nötig ist, um eine Struktur investierbar zu machen. Drei Tests: Notwendigkeit, Sizing, Form.
MRAMandate Readiness AssessmentMandate Readiness Assessment
A diagnostic that surfaces whether an allocator's mandate, governance and instrument architecture are aligned for a given thesis — before a vehicle is launched. Run by the allocator, on themselves. Four parts: mandate boundaries, governance cadence, instrument architecture, decision authority.
Example: a pension fund had board-approved thematic mandate, IC-approved budget, manager identified. Diagnostic surfaced: governance cadence wrong (quarterly IC for a structure needing monthly decisioning), custodian could not carry the proposed tokenised wrapper, decision authority unclear due to recent CIO transition. Three of four broken. The structure was fine; the mandate wasn't ready.
Not to be confused with: due diligence on a manager. MRA is run by the allocator on themselves, not on counterparties.
Read further: methodology section · the discipline page
Eine Diagnose, die offenlegt, ob das Mandat, die Governance und die Instrumentenarchitektur eines Allokators für eine gegebene These ausgerichtet sind — bevor ein Vehikel aufgesetzt wird.
CSCapital structuringCapital Structuring
Vehicles, jurisdictions and wrappers. The structural primitives that determine what a mandate can legally be, where it sits, and what it can hold.
Vehikel, Jurisdiktionen und Hüllen. Die strukturellen Grundelemente, die bestimmen, was ein Mandat rechtlich sein kann, wo es sitzt, und was es halten kann.
- AIFM · Alternative Investment Fund Manager
- EU-regulated manager authorised under AIFMD; the required wrapper for managing and marketing alternative-fund vehicles to professional EU investors.
- RAIF · Reserved Alternative Investment Fund
- Luxembourg fund vehicle that is AIFM-supervised but bypasses direct CSSF product approval. Fast time-to-market for blended-finance sleeves, family-office captives and bespoke alternatives.
- SCSp · Société en Commandite Spéciale
- Luxembourg limited partnership — tax-transparent, contract-flexible, no separate legal personality. Frequently the legal form inside a RAIF wrapper for closed-end PE/VC and private-credit strategies.
- SICAV · Société d'Investissement à Capital Variable
- Open-ended fund company with variable capital, used for both UCITS and AIF strategies in Luxembourg, Switzerland and elsewhere.
- ELTIF · European Long-Term Investment Fund
- Marketable to retail across the EU under harmonised rules; designed to channel long-term capital into infrastructure, real assets and SME finance.
- SPV · Special Purpose Vehicle
- Bankruptcy-remote legal entity created to hold specific assets and issue securities backed exclusively by those assets. Isolates the structure from originator credit risk.
- Master-feeder structure
- Configuration where one or more feeder funds invest substantially all assets into a single master fund. Pools capital across LPs with different tax or jurisdictional needs while running one portfolio.
- Parallel vehicle
- Separate fund structure investing alongside a primary vehicle on identical economic terms. Accommodates LPs whose tax, regulatory or jurisdictional position is incompatible with the primary structure.
- Continuation fund
- Vehicle that takes assets from an expiring fund and extends their hold period under new LP terms. Resolves the tension between fund-life conventions and longer asset lives.
- Captive vehicle
- Family- or sponsor-controlled standing platform for repeat direct allocation. Concentrates upfront cost; collapses marginal cost per deal.
- PCC · Protected Cell Company
- Multi-cell structure under one legal hull where each cell's assets and liabilities are statutorily ring-fenced from the others. Common in Guernsey, Mauritius and Liechtenstein.
- LOF · Loan-Originating AIF
- AIFMD vehicle authorised to originate loans directly rather than acquire them. Most common in Luxembourg, Ireland and Liechtenstein for private-credit strategies.
- Tokenisation wrapper
- DLT-based securitisation hull that issues tokens representing fractional or whole interests in underlying assets. Legal status depends on host jurisdiction (Liechtenstein TVTG, Switzerland DLT-Act, Lux Bill 7637).
- Securitisation vehicle
- SPV that pools cash-flow-producing assets and issues tranched securities backed by them. The structural mechanism behind ABS, CLO, RMBS and bespoke private securitisations.
- Cross-border passporting
- Marketing authorisation across EU/EEA jurisdictions via AIFMD or MiFID notification, allowing a vehicle authorised in one member state to be marketed across the bloc.
SFStructured financeStructured Finance
Tranching, credit and the cash-flow waterfall. The mechanics by which a pool of risk is shaped into investable instruments.
Tranching, Credit und der Cashflow-Waterfall. Die Mechanik, mit der ein Risikopool in investierbare Instrumente geformt wird.
- Tranche
- Risk-stratified slice of a structure. Senior, mezzanine and equity tranches differ in priority of cash flow and order of loss absorption.
- Waterfall
- Contractual sequence by which cash flow is distributed across tranches; American (deal-by-deal) and European (whole-fund) are the two common conventions.
- Senior secured
- Top of the capital stack: first claim on cash flow, last in line for losses, backed by specific collateral. Lowest yield, lowest risk.
- Mezzanine
- Layer between senior debt and equity. Higher yield, higher risk; typically rated BB-BBB and often paired with PIK or warrants.
- Subordinated debt
- Debt ranking below senior obligations but above equity in the capital stack and in liquidation. Carries a higher coupon to compensate for the increased loss risk.
- First-loss layer
- Most junior layer; absorbs initial portfolio losses before any other tranche is impaired. Often funded by concessional, sponsor or anchor capital.
- Concessional capital
- Capital priced below market — sub-commercial return, higher risk-tolerance, or both. Provided by DFIs, foundations and public anchors to enable structures that commercial capital alone cannot price.
- Catalytic capital
- Concessional capital deployed with explicit mobilisation intent — sized and shaped to bring commercial capital alongside. Performance is measured by the Mobilisation Multiplier.
- Pari passu
- Equal-ranking in the waterfall and in liquidation. Identical loss profile per dollar across pari-passu positions.
- Cross-collateralisation
- Structural feature where collateral pledged for one obligation also stands behind others in the same structure. Concentrates security; concentrates risk.
- ABL · Asset-Based Lending
- Credit secured against operating assets — inventory, receivables, equipment — rather than against cash flow or balance sheet. The asset is the underwrite.
- Credit enhancement
- Structural features (overcollateralisation, reserve accounts, guarantees, monoline insurance) that improve a tranche's credit profile beyond the underlying collateral.
- PD · Probability of Default
- Estimated likelihood that a borrower fails to meet its obligations over a defined horizon. A primary input into expected-loss pricing.
- LGD · Loss-Given-Default
- Expected loss as a percentage of exposure given that default occurs, after collateral recovery and workout. Pairs with PD to size expected loss.
- Warehouse facility
- Short-term financing line — typically bank-provided — used to accumulate assets ahead of a securitisation closing or repeat-issuance programme.
VBVenture buildingVenture Building
Operator-side instruments and capital-stack architecture. The vocabulary that connects ventures to non-dilutive structure.
Operatorseitige Instrumente und Capital-Stack-Architektur. Das Vokabular, das Ventures mit nicht-verwässernder Struktur verbindet.
- Capital stack
- Layered financing architecture of a venture: senior secured, mezzanine, convertible, equity, asset-backed sleeves. The shape determines what the company can actually fund.
- Venture debt
- Senior secured loans to venture-backed companies, sized against the most recent equity round. Typically includes warrants and is issued by specialist lenders or commercial banks.
- SAFE · Simple Agreement for Future Equity
- Y Combinator-originated convertible instrument that converts to equity at the next priced round. No maturity, no interest; valuation cap and discount are the negotiated terms.
- Convertible note
- Debt instrument that converts to equity at a defined trigger (priced round, maturity, change of control). Carries interest and a maturity date, unlike a SAFE.
- Bridge round
- Interim financing between larger priced rounds. Typically convertible, structured to extend runway without re-pricing.
- Royalty / milestone notes
- Structured credit instruments whose drawdown, principal forgiveness or interest profile ties to revenue percentage or operational milestones (FDA approval, first paying customer, regulatory licence).
- Cap-table engineering
- Deliberate structuring of equity ownership across rounds — share classes, conversion mechanics, vesting, anti-dilution — to preserve founder optionality and allocate downstream economics intentionally.
- Spin-out
- New venture spun out from a corporate, lab or university with associated IP, team and often anchor capital from the parent.
- Carve-out
- Business unit separated from a parent company and financed independently, frequently with sponsor equity and structured debt.
- Founder-side capital strategy
- Operator-side architecture covering multi-round dilution path, strategic-vs-financial mix, asset-backed sleeves and exit-route preservation. Counterpart to allocator-side mandate work.
ACAllocator-side · fund mechanicsAllokator-Seite · Fund Mechanics
LP economics, governance, and the negotiation surface of a closed-end fund. The vocabulary that lives inside the LPA.
LP-Ökonomie, Governance und die Verhandlungsoberfläche eines Closed-End-Fonds. Das Vokabular, das im LPA lebt.
- LPA · Limited Partnership Agreement
- Governing contract between GP and LPs in a closed-end fund. Defines economics, governance, transfer rules, conduct and termination.
- IC · Investment Committee
- Decision-making body for allocations. Cadence, quorum and delegation rules determine the speed and shape of capital deployment.
- Hurdle rate
- Preferred return threshold (commonly 8% per annum) that must be paid to LPs before the GP's carried interest begins to accrue.
- Carried interest
- Performance fee paid to the GP — typically 20% of profits above the hurdle rate. The economic engine of a private-funds GP.
- Catch-up
- Waterfall mechanism allowing the GP to receive 100% of distributions above the hurdle until the cumulative split between LPs and GP matches the contractual carried-interest rate.
- Clawback
- Provision requiring the GP to return previously received carry if subsequent fund performance falls below contractual thresholds. Aligns timing of payments to realised performance.
- SAA · Strategic Asset Allocation
- Long-term allocation policy of an institutional allocator across asset classes, regions and risk buckets. Determines whether a given vehicle is even readable to the IC.
- LDI · Liability-Driven Investment
- Allocation framework — common to pension and insurance allocators — that aligns asset duration and cash flow to underlying liabilities. Constrains the kinds of vehicles such allocators can hold.
- Side letter
- Bilateral contractual amendment between a single LP and the GP, modifying fund terms (fee discounts, MFN, transfer rights, reporting). Confidential, negotiated at subscription.
- Anchor LP
- First major commitment to a fund — typically 15-25% of fund size. Signals credibility, unlocks subsequent commitments, and is usually accommodated with bespoke side-letter terms.
For the full discipline page — origin, principles, neighbouring disciplines and the Institute — read the long form.
Für die vollständige Disziplin-Seite — Ursprung, Prinzipien, benachbarte Disziplinen und das Institute — siehe Langform.
Open the hub →Hub öffnen →