How do Fund of Funds get around the SEC look-through rules for investment companies? Say a FoF has 30-40 LPs and is structured as an LLC, wouldn't the SEC look through the fund entity and count each of the FoF investors as an investor in the fund? If so that would drastically reduce the number of investors they could have on their cap table.
Generally speaking, venture funds do not structure themselves as LLCs - we typically see the following multi-entity structure for Delaware domiciled funds:
- Management Company - LLC
- General Partner entity - LLC
- Fund - Limited Partnership
Please read this for more information: https://govclab.com/2022/02/09/the-ideal-number-of-lps-in-a-vc-fund/