Venture Capital Funds can quality for certain exemptions from registering with the SEC as an "Investment Company". Section 3(c)(1) of the Investment Company Act of 1940 provides exemptions for:
- private funds with 100 or fewer investors;
- venture capital funds with fewer than 250 investors (under $10M and meeting other requirements);
Counting the proper number of investors can be a complex and nuanced process due to ultimate beneficial ownership and look-through for entities (and other factors), etc. - therefore we strongly recommend consulting an experienced fund attorney for assistance WELL BEFORE a fund may run up against either of these limits.