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- Form ADV is a mandatory document for investment advisers to register with the SEC and state securities authorities. The idea is to provide a public record that consumers can look up.
- Most VCs qualify as Exempt Reporting Advisers—meaning they do not have to fully complete Form ADV. In many cases, a truncated version is all they need.
- AngelList can help fund managers file a truncated version of Form ADV and manage the required annual amendments.
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Form ADV is the official application investment advisers must fill out to register with the SEC and state securities authorities. As a public document, the Form ADV is meant to protect consumers by allowing them to check their financial adviser’s detailed record—including fee structure, affiliations, assets under management, and disciplinary history.
However, because most venture capital firms qualify as Exempt Reporting Advisers (ERAs), their requirements with respect to Form ADV are slightly different. In this guide, we’ll dive into exactly what those requirements are—including how they differ according to assets under management (AUM) and primary business location, and how to get about filing Form ADV.
What is Form ADV?
The full name of the SEC’s Form ADV is the Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Adviser. Form ADV filings are made publicly available on the SEC’s Investment Adviser Public Disclosure website as a resource for the general public. Before signing up with any investment adviser, it is best practice to refer to their Form ADV as it will contain information regarding:
- The history of the firm,
- Its principal owners and their certifications, education, and work history,
- Its assets under management,
- The types of services it offers (e.g., financial planning, small business advice, fund management),
- Its typical client profile and the minimum account size,
- How the firm analyzes and comes up with its investment strategies,
- Whether any disciplinary action has previously been taken against them,
- How it earns its income—e.g., whether it takes commissions from selling securities or other products—and its billing practices,
- Its code of ethics,
- Its brokerage practices, and
- Its policies on custody of clients’ assets, referrals, and account reviews.
As you can imagine, the full Form ADV can be rather extensive. It is split into two parts: Form ADV Part 1 contains 12 distinct items, while the Form ADV Part 2 has 18 items. Part 1 contains more standardized information while Part 2 is what is known as a “narrative brochure” that contains information more relevant for clients evaluating an adviser—such as their fee structure, disciplinary history, and code of ethics.
The truncated ADV is significantly less onerous and requires investment advisers to only complete certain sections of Form ADV Part 1:
- Item 1 – Identifying Information
- Item 2. B and C – SEC (if applicable) and State Reporting by Exempt Reporting Advisers
- Item 3 – Form of Organization
- Item 6 – Other Business Activities
- Item 7 – Financial Industry Affiliations and Private Fund Reporting
- Item 10 – Control Persons
- Item 11 – Disclosure Information
- Schedules A, B, C, and D (as applicable).
Does Form ADV Apply to VCs?
As we mentioned above, most VC advisers qualify as ERAs. We go over the implications of this in detail in this article, but here’s a quick summary of the two main ways to qualify as an ERA:
- The Private Fund Adviser Exemption. You are a U.S.-based investment adviser that only manages private funds and has less than $150M in AUM across all your funds.
- The Venture Capital Adviser Exemption. You are an investment adviser that only advises VC funds as defined in the Advisers Act (AngelList qualifies under this exemption). This means the fund being advised must:
- Plainly state itself as pursuing a “venture capital strategy” in all marketing and investor materials,
- Have a minimum 80% of its committed capital be in liquid short-term holdings or “qualifying investments,” which are direct equity stakes in private companies. This means qualifying investments do not include debt (although convertible debt qualifies) or equity stakes purchased via the secondary market or in funds of funds,
- Not incur debt beyond 15% of its committed capital. Further, any borrowings must be non-renewable with a term no longer than 120 days (except when guaranteeing portfolio debt),
- Not permit investors to redeem their interest in a fund (although they can receive pro rata distributions),
- Not be registered under the Investment Company Act of 1940—which essentially prohibits them from becoming publicly traded or taking on more than a certain number of non-accredited investors or non-qualified purchasers.
As such, most VC advisers do not have to file the full Form ADV with the SEC—much in the same way they’re exempt from state-level blue sky laws. However, in the same way VCs must still make state blue sky notice filings, they may also have to file the truncated Form ADV with the SEC and, where applicable, any relevant state securities regulators.
If you are a VC that meets the requirements of being an ERA, which regulator(s) you must file the truncated Form ADV with—or whether you must file the truncated Form ADV at all—depends on, (i) whether your AUM is above or below the $25M threshold, (ii) the number of advised clients, and (iii) the location(s) of your business.
- If your AUM is under $25M: You do not have to file with the SEC. Depending on your place(s) of business and the number of clients you advise, you may need to file as an ERA (via the truncated Form ADV) or you may be required to register with your state securities regulator(s).
- If your AUM is $25M or higher: You will file a truncated Form ADV with the SEC, with notice filings or registration, as appropriate, to the relevant state(s).
Note: While many states require ERAs to file a truncated Form ADV, the exemption landscape for private fund advisers at the state level can be incredibly complex. In some states, an adviser that meets the federal definition for an ERA may still be required to register with their local jurisdiction. It is always worth checking with qualified legal counsel to confirm the specific requirements of your state before you file. Where applicable, you can file a Form ADV with both the SEC and the relevant states simultaneously through a single submission.
Form ADV Instructions – How to File a Truncated Form ADV
Unlike the full Form ADV required for their registered counterparts, the truncated Form ADV that ERAs must file contains only certain items from the Form ADV Part 1. If you determine the Form ADV is required for your business, here are the steps you need to take to file an initial truncated Form ADV.
- Create a FINRA account.
- After obtaining your login credentials, head to the FINRA Gateway Page, navigate to the “Links” section on the right, and select “Classic CRD.”
- Go to the “IARD Main” tab, and in the “Forms” column, look for the “ADV” header and select “New/Draft Filing.”
- If your AUM is above $25M, check the boxes that say “File an Initial Report as an Exempt Reporting Adviser with the SEC” and “File an Initial Report as an Exempt Reporting Adviser with one or more States.” If your AUM is under $25M, then only check the latter box.
- This will bring you to Item 1 of the truncated Form ADV. Proceed to fill out the information as required, which comprises your principal office and place of business, your business hours, official website addresses, details of your regulatory contact person, and confirming certain details about your record keeping, AUM, and reporting status (see screenshot below).
- Once you’ve completed Item 1 and clicked “Next,” you’ll be brought to a page for Item 2. Here, all you need to do is select the state the fund lead/general partner (GP) is in before moving on to Item 3.
- Item 3 is simply selecting the type of legal entity you are (e.g., LLC, LLP, LP), your fiscal year end, and the relevant state the legal entity is registered in.
- After Item 3, you can skip straight to Item 6—other business activities. Here you just have to tick which is your active business (most often it’s “broker-dealer”) and confirm that you are not actively engaged in any other business.
- Item 7 involves disclosing any financial industry affiliations and activities to identify potential conflicts of interest. Note that if you are an adviser to any other private fund, you must also fill out Section 7.B.(1) of Schedule D later.
- After Item 7, you can again skip to Item 10—control persons. If there are any “control persons” that have not been identified in the previous items, you will have to identify them later in Section 10.A. of Schedule D.
- Item 11 is a series of checklists confirming that you have never been found guilty of any previous criminal or disciplinary action.
- After completing those Items, click “Save,” select “Return to Form ADV,” and click “Schedule A/C Direct Owners/Executive Officers” from the dropdown list. Here you must add detailed ownership information.
- Next, move to Schedule D. Here, you will need to add the location of your books and records in Section 1.L, the URLs of any websites or social media pages (e.g. LinkedIn, Twitter, etc.) maintained by your firm in Section 1.I, anf the details of the funds you advise in Section 7.B.(1) and/or 7.B.(2)—including the private fund identification numbers.
- At the top left hand menu, navigate to the Completeness Check. This feature will review your filing for any missed fields in your draft filing. While it can’t catch incorrect data entry, it is always a good idea to run the Completeness Check before submission to ensure you have completed all required fields.
- Once your filing passes the Completeness Check, you should look for the “Execution” menu item and provide your signature and date for the filing. If you are US-based, you should complete the ‘Domestic Investment Adviser Execution Page’. If you are based outside of the US, you should complete the ‘Non-Resident Investment Adviser Execution Page’.
- The truncated Form ADV is now complete. Look for the “Submit Filing” button in the left hand menu which will bring you to the submission page. This final page will allow you to review the applicable fees and submit the filing.
Do note that this isn’t a “one-and-done” requirement—you’ll need to file an annual updating amendment within 90 days after the end of every fiscal year. Each SEC filing (both the initial and subsequent amendments) carries a $150 fee. Fees at the state level vary.
Certain changes to your business during the course of the year may also require you to file an Other-than-Annual Amendment. Generally the need for this filing is reserved for significant business or organizational changes including:
- Change in business name
- Change in office address
- Change in organization type (e.g. LLC to C-Corp)
- Change in disclosure information (e.g. a control person is convicted of a crime related to securities)
Finally, if the fund manager is not based in the U.S., at the time of the initial filing, you may also have to submit a Form ADV-NR in hard copy format to the SEC.
AngelList Can Help With All Form ADV Filings
At AngelList, we offer ERA compliance services for fund managers—which includes the initial Form ADV filing, ongoing annual Form ADV population and filing support, FINRA account management, and fee payments. To learn more, visit our fund manager page.