Resources · Comparisons
Securities lawyer for venture capital funds
Updated: October 2026
A securities lawyer for a venture capital fund handles four things: (1) forming the fund or SPV and drafting the LPA, PPM and subscription documents; (2) the manager's adviser status — usually the venture capital adviser exemption (§203(l)), sometimes the private fund adviser exemption or full RIA registration; (3) the offering exemption — Reg D Rule 506(b) or 506(c), plus Form D and state blue-sky notices; and (4) investor terms, including side letters. FinTech Law handles all four for emerging and established VC managers.
Checklist
VC fund legal checklist
| Workstream | What it covers | Key rule | FinTech Law engagement |
|---|---|---|---|
| Fund formation | LPA, PPM, subscription documents; GP/management company entities | Investment Company Act §3(c)(1) or §3(c)(7) exclusion | Private Fund Formation — from ~$18,000 |
| SPV launch | Single-deal vehicle documents; Form D and blue-sky path | Same exclusions; Reg D | Emerging Manager Launch Kit (SPV) — $7,500 |
| Adviser status | Venture capital ERA, private fund ERA, or RIA; Form ADV on IARD | Advisers Act §203(l) / Rule 203(l)-1; §203(m) / Rule 203(m)-1 | RIA / ERA Registration — typical engagements $8,500 |
| Path decision first | Written memo on which adviser path fits and how to stay on it | — | Regulatory Path Outline — $7,500; Startup Legal Path Review — $1,500 |
| Offering exemption | 506(b) vs 506(c); Form D within 15 days after first sale; state notices | Reg D Rules 506(b), 506(c), 503 | Included in the formation/SPV path as scoped |
| Side letters | MFN, fee and reporting terms, co-invest, excuse rights | Anti-fraud (Rule 206(4)-8) | Quoted separately (not in the fixed formation package) |
Fund size
Investment Company Act investor limits (separate from adviser status)
As of October 2026
Section 3(c)(1) limits a 3(c)(1) fund to 100 beneficial owners (funds relying on Section 3(c)(7) are not subject to that cap).
A qualifying venture capital fund that meets the Rule 203(l)-1 venture capital fund definition may have up to 250 beneficial owners if its aggregate capital contributions and uncalled committed capital do not exceed $12 million (as adjusted by the SEC in 2024). These limits are subject to change; see the SEC's qualifying venture capital fund inflation-adjustment rule for the current figure.
Adviser status
The 203(l) venture capital adviser exemption in one paragraph
Every fund you advise — including each SPV — must be a "venture capital fund" under Rule 203(l)-1: it represents a venture capital strategy to investors; holds no more than 20% of capital contributions and uncalled commitments in non-qualifying investments (secondaries and fund interests count here); limits borrowing to 15% with short terms; gives no routine redemption rights; and is not a registered fund or BDC. There is no AUM cap. You still file a partial Form ADV within 60 days after relying on the exemption (Form ADV General Instruction 13) and update it annually. See the ERA exemptions guide for the comparison table and what breaks the exemption.
Offering
506(b) vs 506(c)
| Rule 506(b) | Rule 506(c) | |
|---|---|---|
| General solicitation | Not allowed | Allowed |
| Who can invest | Accredited investors, plus up to 35 non-accredited but sophisticated purchasers (with added disclosure duties) | Accredited investors only |
| Verification | Reasonable belief / investor questionnaire | Issuer must take reasonable steps to verify accredited status |
| Form D | Within 15 days after first sale | Same |
| State law | Covered securities; state notice filings and fees | Same |
| Bad-actor rule (506(d)) | Applies | Applies |
In March 2025, Division of Corporation Finance staff issued a no-action letter (March 12, 2025) stating that, for a Rule 506(c) offering, an issuer could reasonably conclude it took reasonable steps to verify accredited investor status if purchasers commit at least $200,000 (natural persons) or $1,000,000 (legal entities), including binding capital commitments, together with written representations that they qualify as accredited investors and that the minimum investment is not financed in whole or in part by a third party for the purpose of making this investment — provided the issuer has no actual knowledge that a purchaser is not accredited or that the minimum investment is third-party financed for that purpose. The letter reflects staff views, not a Commission rule or regulation.
SEC Division of Corporation Finance staff no-action letter (March 12, 2025)
Terms
Side letters
Common terms: most-favored-nation clauses, fee or carry adjustments, information rights, co-investment rights, LPAC seats, excuse rights. The SEC's 2023 Private Fund Adviser Rules (including preferential-treatment disclosure) were vacated by the Fifth Circuit in June 2024, but anti-fraud rules still apply — disclose material preferential terms to other investors. Side letters are outside the fixed Private Fund Formation package and are quoted before work starts.
Your matter
Who handles your matter
Bo Howell, Founder & Managing Attorney. Served in the SEC Division of Investment Management.
Talk with counsel
Qualified inquiries go through FinTech Law contact intake. Meetings are scheduled after qualification.
This page is general information, not legal advice. No attorney–client relationship is formed by reading it.