As demand for seed investment outstrips supply, the seeding market has become highly fragmented. Many of the well-known seeders only seed a handful of deals each year. While some early institutional seeders have left the seeding business, new seeders are entering the market - sometimes they are family offices or high net worth individuals. Their allocations tend to be smaller and less frequent.

Traditional private equity firms are entering the seeding space as well. These trends are changing the landscape for seeders. The seeding landscape has also changed for hedge fund managers. Managers are often coming out of firms that have extensive experience and multiple years of track record but they can't get the capital to set up the infrastructure they need to attract institutional capital. Managers need to be committed for multiple years and provide an institutional quality platform while having the patience required to raise capital.

Lois Peltz, president of Infovest21, and author of the report, observes: "There are more joint ventures being formed among seeders as a way to enter more challenging markets such as Asia."

Seeders agree that there is significant talent available in Asia. The Dodd Frank and Volcker rule have led to the closure of investment banking propriety trading desks and financing of hedge funds. Often these Asian managers have been trained by US firms but there is also an emerging set of managers setting up on their own after having worked for second-generation managers. Those prior firms' roots were in Western firms but the second generation firms were home grown. They have made significant progress in improving the infrastructure.

Views are mixed on the quality of new manager talent globally. Many say talent has been good for a long time. They have become more experienced due to recent political and economic events.

Another school of thought is that the n......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.