Seward & Kissel Seed Investments Study Highlights Shift Toward Illiquid Strategies

11^th Annual Study Also Shows Deals Trending Toward “Manager-Friendly” and “Third-Party Investor-Friendly” Structures

NEW YORK--(BUSINESS WIRE)--Seward & Kissel’s 2024 Seed Transaction Deal Points study reveals a continued shift in seed investment activity toward private equity and private credit strategies, marking a departure from the historical emphasis on hedge funds and other liquid products.

“This evolution has driven innovation in seed deal terms, and we expect this trend to continue, with private market strategies potentially surpassing hedge funds in seeding volume in the near future,” said Seward & Kissel Partner Gary Anderson, lead author of the study.

The study also confirms institutional investors continue to lead seeding activity, contributing to a rise in median check sizes and emphasizing alignment among managers, seeders, and third-party investors.

“The growing emphasis on alignment—whether through shared startup costs, synchronized liquidity terms, or long-term support mechanisms—reflects a maturing market,” said Anderson. “Institutional seeders are not only providing capital but also shaping the strategic trajectory of new investment platforms. As seeders continue to adapt to new structures and capital formation strategies, as well as evolving investor expectations, we anticipate further refinement of economic terms and a broader embrace of manager- and investor-friendly structures.”

Key findings from the 2024 Seward & Kissel Seed Transaction Deal Points study include:

• Evolving Deal Terms: Illiquid fund structures are reshaping seed deal terms, with more variance and innovation emerging as the market matures.
• Manager Incentives and Long-Term Orientation: Structured incentives encouraged managers to build sustainable businesses and align with long-term investor interests.
• Trend Toward Alignment and Risk Management: Seeders are more willing to share start-up costs and adopt investor-aligned liquidity terms, while also seeking protections against market volatility.

Download the full 2024 Seed Transactions Deal Points study. Gary Anderson is available to speak to the media about the study.

About Seward & Kissel LLP

Seward & Kissel LLP, founded in 1890, is a leading U.S. law firm with offices in New York City and Washington, D.C., with particular expertise in the financial services, investment management, banking, and shipping industries. The firm is well known for its representation of investment advisers and related investment funds, broker-dealers, major commercial banks, institutional investors, and transportation companies (particularly in the shipping area). Its practices primarily focus on corporate, M&A, securities, litigation (including white collar), restructuring/bankruptcy, real estate, regulatory, tax, employment, and ERISA for clients seeking legal expertise in these areas.