Agree seeding arrangements

What should I consider when I am negotiating a seed deal?

Whilst seeding deals are very valuable at the start-up stage, negotiating a good seed deal that works for all parties involves careful balancing in order to provide the seed investor with a sufficient economic interest and control over the business to provide them with comfort as to how it is being run, against ensuring that that the hedge fund manager does not cede too much control or interests in profit streams or capital for what will hopefully become a successful hedge fund management business in the future. A seed deal including a revenue share or manager equity stake will introduce tax and other complexities both to address the position of the seeder and that of the management business and its principals.

For some essential points to consider when negotiating a seeding agreement in the context of a manager equity stake seeding deal please see the Quick Guide: Negotiating a Seeding Agreement.

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This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.