An exemption under Section 203(m) for advisers who only advise private funds and manage less than $150 million in U.S. AUM. Unlike the VC exemption, there are no restrictions on investment strategy. You can hold secondaries, debt, fund-of-funds positions, or any other asset class. The tradeoff is the AUM cap.
You measure AUM based on the regulatory assets under management of all private funds you advise in the United States. Once you cross $150 million (measured at the time of your annual amendment), you have 90 days to apply for full RIA registration. This triggers a significant compliance buildout: written policies, a designated Chief Compliance Officer, Form ADV Part 2, and preparation for SEC examinations.
Many emerging managers start under this exemption because it accommodates a broader range of fund strategies than the VC exemption. If you plan to grow past $150 million, build your compliance infrastructure early so the transition does not disrupt fundraising or operations.
See The Private Fund Adviser Exemption.
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