If your fund does not qualify as a venture capital fund, the private fund adviser exemption is your path to ERA status. It is more flexible on strategy but caps your size: you qualify only if you manage less than $150 million in regulatory AUM in the United States.
Who Uses This Exemption
The private fund adviser exemption is strategy-agnostic. It works for PE funds, credit funds, real estate funds, secondary funds, multi-strategy vehicles, and anything else that does not meet the narrow VC definition. The only requirements are that you advise exclusively private funds (no separate accounts or retail clients) and stay under $150 million in regulatory AUM.
This is the standard path for emerging PE managers, managers with mixed fund strategies, and anyone whose funds include non-qualifying investments that push them outside the VC definition.
Calculating the $150 Million Threshold
The $150 million cap uses "regulatory assets under management" (RAUM), which is calculated differently than NAV or committed capital. RAUM includes the securities portfolios of all private funds you manage, valued at fair market value. Unfunded commitments are generally not included.
The calculation is specific to U.S. assets. If you manage both U.S. and non-U.S. funds, only your U.S. regulatory AUM counts toward the threshold.
You report RAUM on Form ADV. ERAs relying on this exemption must update their AUM calculation annually to confirm they remain under $150 million.
What Happens at $150 Million
When your regulatory AUM reaches or exceeds $150 million, you must register as an RIA. The timeline is relatively generous: you have until June 30 of the following calendar year to complete registration.
For example, if your AUM crosses $150 million during 2025, you have until June 30, 2026 to register. This gives you time to prepare Part 2 of Form ADV, implement compliance policies, designate a CCO, and meet all other RIA requirements.
The transition is not optional. If you exceed $150 million and do not register, you are operating as an unregistered investment adviser, which carries regulatory risk.
Buffer Zone Considerations
If you are approaching $150 million, planning ahead saves headaches. Some managers begin building their compliance infrastructure (compliance manual, code of ethics, custody arrangements) before they cross the threshold so the RIA transition is smooth.
AUM can fluctuate. A strong performance year or a large new fund close can push you over unexpectedly. If you are at $120 million or above, map out the RIA transition timeline and costs.
Interaction with the VC Exemption
You cannot rely on both exemptions simultaneously. If you have a fund that qualifies as a VC fund and another that does not, you will likely use the private fund adviser exemption for all your funds. Once any fund you advise falls outside the VC definition, the VC adviser exemption is not available.
This means the $150 million cap applies to all your funds combined, not just the non-VC ones.
How Capital Company Helps
Capital Company prepares and files Form D, blue sky filings, and Form ADV for funds on the platform. Schedule a demo to learn more.
This article is for informational purposes only and does not constitute legal advice. Consult qualified legal counsel for advice specific to your situation.