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The Outlook for Seeding and Strategic Partnerships

Seeding has become much more institutionally focused, a shift from what was once a cottage industry, where fund managers were historically seeded by family offices.

At this month’s EisnerAmper breakfast series for fund managers and investors, a quartet of panelists shared their perspectives on seeding and strategic partnerships and how fund managers can prepare if they are vying for capital.

The panelists stressed three key themes: 

  1. Seeding firms are seeking to deploy capital to a wide range of investment strategies. 
    • Some may look to invest opportunistically while others may look at niche markets. 
    • Managers should do their homework before meeting with potential investors to see if there is a viable fit for a partnership. 
     
  2. Managers trying to raise seed capital must have their act together on various fronts in order to be strong contenders, which are just as important as their investment track record of outperformance.
    • Managers must know how to run a business, including managing groups of people.
    • Managers should not underestimate the time needed for business development. The biggest risk to seeders is a breakdown in partnership between a fund’s founders after a deal was done.
     
  3. If managers are simply looking to raise assets, then they are not looking for a true partnership. A seed deal is not for them.
    • Seed investors are ideal for managers expecting operational, infrastructure and marketing support.
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      EisnerAmper would like to thank the panelists for their time and insights they shared at the breakfast:

      Ajai Thomas, Managing Director, Hollis Park Partners
      Brian Mathis, Founding Partner, Pine Street Alternative Asset Management
      Chris Bole, Director, RAMIUS LLC
      Andrew Oskvarek, Associate, Investments, Grosvenor Capital Management
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      Stay tuned for the next breakfast July 16 on “Operational Due Diligence: Navigating the Pitfalls with Prospective Investors.”
     

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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