Current state of hedge fund seed investors
Here’s an article I extracted from THFJ which I find a good read for those of you out there looking for seed investors.
FRM`s Patric de Gentile-Williams comments on the current state of hedge fund seeding
- - The environment for hedge fund seeders has changed dramatically over the last 12 months
- There are now fewer seeders in the market
- Even established funds are looking for seed capital after redemptions have hit their funds
- Some start ups have suffered as their original seeders have withdrawn from the market
- Investors are more stringent than ever before on issues such as corporate governance, use of third party administrators and transparency
Just as some investors pulled assets out of the hedge fund industry in 2008, the amount of capital and the number of firms in hedge fund seeding also reduced. However it is important to stress that this reduction is due to stresses in the parent businesses of the seeders not in the seeding business itself. Today far fewer players are active in providing seed capital to hedge funds. This, combined with the increased difficulty that hedge funds face in raising capital, has created a favourable environment for the remaining seeders.