Being an Exempt Reporting Adviser (ERA) is beneficial because it lets smaller investment managers or those only dealing with venture capital funds skip the heavy paperwork and rules that come with registering with the SEC. This makes running the business easier and cheaper. But, to get this special status, if you're setting up a company like an LLC for this purpose, you will mostly likely need to fill out and submit a form called Form ADV to FINRA.
Here's what you need to know:
Who Can Be an ERA:
People or companies advising funds that either invest in venture capital only or manage less than $150 million in private fund money can opt for ERA status. This means they don't have to go through the full registration process if their business is small enough or focused on venture capital.
What You Need to Do to Become an ERA:
You must file Form ADV with the SEC within 60 days of starting to advise your first fund. You do this online through a system called IARD, run by FINRA. You'll need to give some basic info about yourself, your business, and anyone in control of your company.
Keeping Form ADV Up-to-Date:
Once you're an ERA, you need to update this form every year within 90 days of the end of your business year. If something big changes, you need to update your form right away.
What Happens If You Don't Do It Right:
If you don't file on time or at all, you could face legal action from the SEC, which might lead to fines or orders to stop what you're doing. You could also lose your ERA status and be required to register fully, which means more rules to follow. Your reputation could be hurt, making it harder to get or keep clients. The SEC might also take other actions against you if they find out during checks or if someone complains.
In Short:
To become an ERA, you most likely need to file Form ADV if you manage less than $150 million or just venture capital funds. It's important to do this correctly and on time to keep your status, avoid trouble, and stay on the right side of the law.
Here's what you need to know:
Who Can Be an ERA:
People or companies advising funds that either invest in venture capital only or manage less than $150 million in private fund money can opt for ERA status. This means they don't have to go through the full registration process if their business is small enough or focused on venture capital.
What You Need to Do to Become an ERA:
You must file Form ADV with the SEC within 60 days of starting to advise your first fund. You do this online through a system called IARD, run by FINRA. You'll need to give some basic info about yourself, your business, and anyone in control of your company.
Keeping Form ADV Up-to-Date:
Once you're an ERA, you need to update this form every year within 90 days of the end of your business year. If something big changes, you need to update your form right away.
What Happens If You Don't Do It Right:
If you don't file on time or at all, you could face legal action from the SEC, which might lead to fines or orders to stop what you're doing. You could also lose your ERA status and be required to register fully, which means more rules to follow. Your reputation could be hurt, making it harder to get or keep clients. The SEC might also take other actions against you if they find out during checks or if someone complains.
In Short:
To become an ERA, you most likely need to file Form ADV if you manage less than $150 million or just venture capital funds. It's important to do this correctly and on time to keep your status, avoid trouble, and stay on the right side of the law.
Addendum:
For an individual adviser (or an adviser operating out of one LLC), the Form ADV must cover all investment vehicles, be they SPVs, venture capital funds, other forms of syndicates, etc.
*Should any questions arise, consultation with a securities or regulatory attorney is strong recommended.
*Should any questions arise, consultation with a securities or regulatory attorney is strong recommended.