An exemption from RIA registration under Section 203(l) for advisers who only advise qualifying venture capital funds. The exemption has no AUM cap, so you can manage any amount and remain an ERA. The condition is that every fund you advise must meet the SEC's definition of a venture capital fund.
To qualify, each fund must meet all of the following requirements:
- At least 80% of the fund's assets must be in qualifying investments (primary equity in private operating companies)
- Leverage must not exceed 15% of the fund's aggregate capital contributions and uncalled committed capital, and must be repaid within 120 days
- Investors must not have redemption rights (standard for closed-end VC structures)
The most common disqualifier is holding non-qualifying investments above the 20% threshold. Secondary purchases, fund-of-funds positions, and most debt instruments do not count as qualifying investments. If even one of your funds fails these tests, you lose the VC exemption for your entire advisory business, not just for that fund.
See The VC Fund Adviser Exemption Explained.
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