Sat, May 30, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Angel or devil: Seeding arrangements for emerging fund managers

Tuesday, July 12, 2011

The following article was written by Jeffrey E. Kopiwoda of Funkhouser Vegosen Liebman & Dunn Ltd., email: JKopiwoda@fvldlaw.com

Since 2008, increases in investor trepidation and regulatory action have resulted in greater barriers to entry for emerging fund managers. Simultaneously, the number of managers seeking to start their own funds is expected to increase in 2011 as talented professionals leave institutional proprietary trading desks following the implementation of the Volcker Rule restrictions on banksí proprietary trading activities. As a result, more and more emerging managers are likely to turn to seed investors for early stage capital.

The question is whether entering into a seeding arrangement will more closely resemble a paring with an angel investor or a deal with the devil. Below we discuss 7 key elements of hedge fund seeding arrangements and what terms a fund manager may expect to see and negotiate.

1. The financial arrangement

A seed investor will commonly commit to providing a substantial amount of seed capital to an emerging fund manager as an ďanchorĒ investor in a new fund in exchange for a share of the fee revenues that that the manager generates from the entire pool of assets in the fund. This arrangement should benefit both parties. In the short term, the manager has the opportunity to generate profits from a sufficiently large pool of assets to sustain its operations. Over the medium term, the manager has the opportunity ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: New TMT hedge fund adopts the long-term approach[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Adam Parker founded Center Lake Capital LLC in New York in November 2014. Before that, he was portfolio manager at Point State Capital (the successor fund to Dr

  2. Regulatory - Hedge funds face tax as Iceland poised to end capital controls, Comment: Why alternatives need more transparency, not enforcement[more]

    Hedge funds face tax as Iceland poised to end capital controls From Bloomberg.com: Hedge funds and other investors who bought claims against Icelandís failed banks face a tax that targets the lendersí estates as the government prepares to unveil its plan for exiting capital controls in t

  3. Investing - Nelson Peltzís Trian Fund Management reduces position in Legg Mason, Biotech investors up big amid bubble talk, Hedge funds increase exposure in healthcare[more]

    Nelson Peltzís Trian Fund Management reduces position in Legg Mason From Octafinance.com: Trian Fund Management has filled a SC 13D/A form regarding Legg Mason, Inc. Per Nelson Peltzís Trian Fund Managementís filing, the filler reported decreased stake in the company by -11.05% to 11,03

  4. All hedge fund strategies rebounded last week as market conditions normalize[more]

    Komfie Manalo, Opalesque Asia: After a difficult start this month, all hedge fund strategies ended last week in positive territory, as the Lyxor Hedge Fund Index gained 0.9% (-0.2% MTD, 3.3% YTD). According to Lyxor AMís latest Weekly Briefing, in t

  5. Billionaire hedge fund investor Odey says April 'bloody', has cut risk[more]

    From Reuters/Yahoo.com: Billionaire hedge fund manager Crispin Odey has cut risk and leverage following a stunning 19.3 percent loss in his 3.1 billion euros (2 billion pounds) Odey European Inc fund in April, a letter to investors seen by Reuters showed. Describing the month as "bloody", Odey

 

banner