Reference

When running a fund makes you a registered investment adviser

The federal line sits at $150 million in private fund assets. Below it there is an exemption; above it there is not. But the federal line is not the only line.

Managing other people’s money for compensation generally makes you an investment adviser. Whether you must register is a different question, and for a first fund the answer is usually no — because of one exemption with one number in it.

What the rule says

Both conditions, not either. Solely private funds — take one separately managed account and the exemption is gone. And under $150 million in private fund assets.

Exempt is not invisible

An adviser relying on this exemption is an exempt reporting adviser, which still files a partial Form ADV and still updates it annually. “Exempt” means exempt from registration, not from filing, not from the Advisers Act antifraud provisions, and not from the fiduciary duty you owe your fund.

The rule also tells you when to count:

The line that catches people is not the federal one

Federal registration is only one of the regimes in play. States have their own adviser rules, their own thresholds, and their own exemptions — and they are not uniform. An adviser too small for the SEC can be squarely within a state’s registration requirement.

We are not going to tell you what your state requires, because the honest answer is that it depends on which state, on your facts, and on rules that change. It is the single most common gap we see assumed away in a first fund: the founder checks the $150 million number, concludes they are fine, and never looks at the state.

What to take from this

If you are raising a first fund of $10 million, federal registration is almost certainly not your problem. Your Form ADV as an exempt reporting adviser, your state’s position, and the fiduciary duty that attaches regardless of registration are all live from day one.

Registration itself becomes a real project well before you touch $150 million, because you cannot build a compliance programme the week you cross a threshold. If your fund is growing toward it, that is a conversation to have a year early rather than a quarter late.