Tue, Oct 25, 2016
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 banks’ 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 “anchor” 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. M&A - U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga, Hedge fund Parvus shows hand, toppling William Hill merger deal[more]

    U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga From Thisismoney.co.uk: The fierce battle to buy Britain's biggest private equity group has come to an unexpected conclusion, with the original bidder walking away with the prize. SVG Capital has agreed

  2. Marc Lasry: Energy is still a phenomenal opportunity[more]

    From CNBC.com: Distressed debt specialist Marc Lasry said energy debt is still a "phenomenal opportunity" because investors can get "massively overpaid" for the risk they take on. There are "huge opportunities" in the energy sector especially in restructurings, the Avenue Capital Group CEO said Tues

  3. Opalesque Exclusive: Ex-SAC manager re-emerges with market neutral hedge fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A manager re-emerged from the SAC battleground last year to launch his own hedge fund under the umbrella of New York-based investment firm Endicott Group.

  4. North America - Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation, Billionaire hedge fund titans Dinan, Lasry on election, markets and best investment ideas[more]

    Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation From Marketwatch.com: Kyle Bass, founder of Hayman Capital Management, on Wednesday warned that the U.S. is headed toward so-called stagflation. Stagflation is typically described as persistently high inflation and hi

  5. David Einhorn speaks on passive investing, Mylan, his cheapest stock, the Fed[more]

    From Forbes.com: Greenlight Capital hedge fund manager David Einhorn (Trades, Portfolio) joined nine other famed investors on Tuesday to talk about stocks at the annual Great Investors’ Best Ideas Investment Symposium in Dallas. Presenters at the annual conference typically pitch one or severa