With overall launches of new hedge funds trending downward in 2016 due to the challenges these managers face in trying to raise capital, seeding activity was even weaker in 2016, when compared to 2015. This was one of the findings of a recent Seward & Kissel (S&K) study that analyzed key terms in seed-deal transactions, using data gleaned from seed deals executed in 2016 where S&K represented one of the parties in the seeding transaction. This two-part series analyzes key observations from the study and S&K’s findings with respect to the evolution of seed-deal terms. This first installment reviews the current seeding environment and discusses the results from the study concerning the following seed-deal provisions: prevalence of equity shares versus revenue shares; key-person covenants; and lock-ups. The second installment will explore the study’s findings with respect to additional seed-deal terms, including participation, capacity, most favored nation and consent rights; transparency terms; and the pros and cons of buyout rights for managers. The series also includes insights from Gary Anderson, partner at S&K and lead author of the study. For more from S&K on seeding, see “Seward & Kissel Private Funds Forum Analyzes Trends in Hedge Fund Seeding Arrangements and Fee Structures (Part One of Two)” (Jul. 23, 2015).