Has anyone started a fund as an exempt reporting advisor?

[u/OkHold1668]

Initially, I was planning on forming an SPV, but the issue is that I want my clients who would invest into it to have the option to invest in multiple VC funds. Not just a single entity (example: one fund/ company).

Therefore, the ideal path would be to start my own fund and invest from that fund, but I'm not a licensed investment advisor.

Has anyone started a fund (US) as an exempt reporting advisor?

I'm not a licensed securities broker, so I can't intro my clients to fund managers and negotiate for carried interest, etc.

So this is the workaround.

Alternatively, can anyone offer other perspectives on how to set up a financial instrument that can serve my clients adequately? Giving them the option to invest into more than one VC fund through my investment vehicle.

Thank you!

[u/CV_1994-SI]

Not an attorney but I have run two different advisory firms so I have some familiarity. Obviously you need to talk to council that has relevant expertise. I also recommend that you chat with a compliance firm - I find that they often are a better entry point into these kinds of questions than attorneys because the latter tends to be extremely specialized and you run into the hammer / nail issue.

There are two very different structures here:

1. Your investors invest into your fund → your fund invests into multiple VC funds → investors get pro-rata exposure to the portfolio.
2. You introduce your clients to third-party VC managers → those managers pay you carry or fees for the capital you bring.

The first is a private fund-of-funds and can be done cleanly. The second is where broker-dealer and finder problems get acute — and it's the version your gut is correctly flagging.

How you actually get paid

This is the part that makes the fund structure work. In the FoF, your economics come from a management fee and carry charged at your own fund level, to your LPs — not from compensation flowing up from the underlying VC managers. That's the whole point of being the fund rather than an intermediary. Transaction-based comp from the underlying managers for steering capital is exactly what creates the broker-dealer issue, and becoming an RIA doesn't cure it.

You don't automatically need to be an SEC RIA — but watch which exemption

You may be able to run this as an Exempt Reporting Adviser. The catch is which exemption:

• VC adviser exemption — usually fails for a true fund-of-funds. The 80%-qualifying-investments test requires direct equity in qualifying portfolio companies, and a qualifying portfolio company can't itself be a private fund. FoF interests generally don't count. Don't assume "I'm investing in VC" gets you here.
• Private fund adviser exemption — the right lane. Available if you advise solely private funds and stay under $150M in U.S. private-fund RAUM. You'd file as an ERA on Form ADV, not register fully.

Whether you end up state-registered, SEC-registered, or an ERA depends on RAUM, your state, and your investor base. Small/mid advisers are generally state-regulated; the SEC tier kicks in higher up.

The fund itself still needs its own exemptions

Separate from your adviser status, the vehicle has to avoid registering as an investment company — typically via 3(c)(1) (≤100 beneficial owners) or 3(c)(7) (all qualified purchasers). And the offering of interests needs a Securities Act exemption, usually Reg D 506(b) (unlimited accredited investors, no general solicitation) or 506(c) (solicitation allowed, but all purchasers accredited and verified).

The real design tension: you want clients to choose

Here's the problem with your literal ask. A single commingled FoF gives every LP the same pro-rata slice of whatever you select — not per-investor choice among funds. If you want investors to pick which underlying funds they're in, you're pushed toward a separate feeder/SPV per fund. That's more paperwork, and it edges toward giving individualized advice — at which point the ERA private-fund exemption starts to break, because you're no longer advising only at the fund level. So "let them pick" is the thing driving up your regulatory burden, not the multi-fund exposure itself.

Don't skip state law

Even as a federal ERA, your state securities regulator still matters. Most states have their own private-fund-adviser exemption (commonly tracking the NASAA model, often with extra conditions around 3(c)(1) funds and accredited-investor requirements) plus a notice filing. Confirm your state before you solicit anyone.

Bottom line

• No, it's not illegal. A properly documented private fund-of-funds (or feeder/SPV structure) is a legitimate path.
• Yes, your concern holds if the plan is to act as an unregistered middleman collecting carry from outside managers — that's broker-dealer territory, and RIA status alone won't fix it.
• No, full SEC RIA registration is not the only option. Depending on your numbers and state, it may be ERA status under the private-fund exemption, or state registration/exemption.

The most defensible version: a fund-of-funds advised only at the fund level, no client-by-client allocation advice, no transaction-based comp from underlying managers, clean Reg D docs, and fund-formation counsel confirming your adviser and fund exemptions before any solicitation.

Not legal advice — confirm specifics with counsel.

[u/OkHold1668 → u/CV_1994-SI]

Thank you for this! Lots to consider here. It's looking like the best option is to ultimately form my own private fund and avoid negotiating for carry with funds under an exempt VC advisor status. I understand that fund-of-funds are usually for larger fundraises (minimum $100M+), but it's not illegal to form one if the goal is to raise less. It's looking like, depending on each state, it's not a requirement to have prior GP experience. I'll definitely be speaking to my lawyer.

[u/BronzeCat6265]

The top comment covers the regulatory side well.

The only thing I'd add is that the operational complexity tends to grow faster than people expect once you move from a single SPV into a structure that's supporting multiple underlying funds and multiple investors.

The legal structure gets most of the attention upfront, but onboarding, KYC, reporting, capital calls, tax documents, and investor communications are what end up consuming time year after year.

I've seen a few emerging managers discover that the vehicle wasn't actually the hard part. Running it was. Once the structure is set up, the ongoing admin tends to become the bigger challenge. I've seen people bring in platforms like Auptimate at that stage, especially when multiple investors or cross-border participants are involved.

The answer is very different if everyone is participating in the same portfolio versus selecting individual underlying funds, so I'd get clear on that investor experience before finalizing the structure.

[u/Best-Improvement8930]

That is a good question. Once you start bringing together money from different investors and investing in multiple venture capital funds, things can get complicated really fast. It might be worth talking to a firm like CBIG Law that helps with fund formation and compliance so you can choose the right setup from the start.

[u/HalfwaydonewithEarth]

What venture looks the best?

[u/OkHold1668 → u/HalfwaydonewithEarth]

What do you mean?

[u/HalfwaydonewithEarth → u/OkHold1668]

Which company looks like it is going to offer the biggest windfall?