Introduction
As was the case across nearly all other industries and sectors, the emergence of the COVID-19 pandemic and related global, national and local responses played an outsized role in the number and nature of seed investments throughout 2020. While activity during the first several months of 2020 was broadly consistent with 2019 trends, the effects of the international lock-down at the end of the first quarter of 2020 provided both promise and peril for historical seed investors, as the return of extreme market volatility reminded allocators of the attractiveness of portfolio exposure to hedged investment products, while the unknowns of how the pandemic would be resolved highlighted the risk of a rapid loss of a seed investment if the markets took a downward trajectory.
Key Observations:
- Long/short equity strategies remained a significant portion of overall seeding activity
- Hybrid structures remained popular with seeders
- Closed-end fund structures, such as private equity or venture capital, represented a growing share of activity
- A modest increase in investor level gates
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