Regulatory for Private Funds

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Regulatory for private funds includes venture capital funds.

VC funds can find an exemption from regulatory requirements by one of the following:

Having fewer than 100 owners in the fund.

This excludes entities created for the purpose of investing in the fund, such as SPVs or Special Purpose Vehicles.

This is known as Section 3(c)(1).

A qualifying venture capital fund can have up to 250 beneficial owners if the fund is less than $10M.

It must pursue a venture capital investment strategy.

It cannot be highly leveraged with debt.

It cannot have redemption rights.

Section 3(c)(7) concerns a fund that requires qualified investors.

A fund cannot have more than 1,999 investors, so it's not a reporting company.

Only qualified investors, not accredited investors, can invest.

Qualified investors have $5M invested or they are an entity with $25M of investments.

Review the regulatory requirements around a venture capital fund before launching one.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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