# VC 101 | CARTA CLASSROOM # What’s a venture capital fund? Venture capital can be fascinating yet complex—but there’s help. VC 101 is your guide through the complicated venture capital landscape, making the hard stuff feel easy, giving you a better understanding of VC, and a foundation to help you build your own fund. * * * Click for sound Chapter 1: What's a venture capital fund? Chapter 2: The venture capital industry Chapter 3: How VC funds are structured Chapter 4: Limited partnerships & management companies Chapter 5, pt. 1: VC regulations Chapter 5, pt. 2: VC regulations Chapter 5, pt. 3: VC regulations Transcript All right. Now that you know how venture capital funds are structured, it’s time to dive into everyone’s favorite subject: regulations. Like everything in the financial sector, venture capital has regulations that you’re gonna want to know about as you move through your journey. Your fund and the whole fundraising process are all going to have to comply with these regulations. So before you raise any money, it’s really important to understand this regulatory landscape. It’s going to have an impact on how much you raise, who you raise from, and literally how you actually run the race. So buckle up, because this next lesson is going to come in three parts. Across the whole thing, we’re going to go deep into the weeds on everything you need to know about venture capital regulation. So right out of the gate, there are three main areas where regulations are going to focus: the fund, the fund adviser, and the fundraising process itself. Under U.S. laws, each one of these categories has one overriding framework: you’re gonna have to register with the Securities Exchange Commission (SEC) or the FCC, unless you fit into an exemption that allows you to not register with the FCC. Now, registration comes with a whole bunch of painful stuff, and that’s why you may want to look for an exemption. So if you take anything away from these next lessons, remember: registration unless they fit into an exemption. So first off, let’s dive into registration. And from there, we’ll zoom right in on the first category: the fund. We talked in lesson one about how a fund is a legal entity set up to make investments. So it pretty neatly fits into what the SEC calls an investment company. And investment companies need to register with the SEC unless there’s some kind of exemption, which for you means a fund typically needs to register with the SEC as an investment company unless there’s some kind of exemption. We’re going to talk about these exemptions in the next lesson. But for now, just know this one general thing: the fund needs to register unless there’s an exemption. Cool. Similarly, if we go down the list to fund advisors, unless there’s some kind of exemption, fund advisors also have to register either with the SEC or a state regulator if they do the following things: if they give investment advice on securities as a job, if they manage certain types of funds, or if they make certain types of investments. If it sounds like exactly the type of things fund advisors do, then yeah, that’s because it is. So fund advisors also need to register, unless they fit into an exemption. And finally, we’re going to keep going down that list to the fundraising process itself. So when a fund raises money from LP’s in exchange for partial ownership of that fund, well, what they’re actually doing is selling equity, and that fund. And guess what? This sale of equity also has to be registered with the SEC unless there’s an exemption. Now we keep coming back to this idea of registration, unless there’s an exemption. So why are we so concerned with this idea of registration? High level? There’s a whole bunch of stuff that comes along with SEC registration. You’ve got big requirements for reporting disclosures and all types of other compliance-related stuff. And dealing with all these requirements can be super expensive and take a lot of time. But like we’ve been saying, the law does recognize certain exemptions from having to register, and that’s the focus of our next lesson: exemptions. So go stretch your legs, grab a glass of water, and take a deep breath, because this is where we’re going to start diving in headfirst. When you’re ready, click on over and let’s do it. ## Your guide to launching your firm Starting a venture capital firm can be complex. That’s why Carta built a playbook to help managers build their funds every step of the way. ## Explore course content 7 videos • 43m total length Chapter 1: What’s a venture capital fund? Meet the VC fund—learn what it is, how it’s different, and the unique structure that organizes it. Chapter 2: The venture capital industry Learn about the five core legal requirements that make a fund a venture capital fund. Chapter 3: How VC funds are structured See how management companies, fund entities, and general and limited partners make up a VC fund. Chapter 4: Limited partnerships & management companies Understand the limited partnership agreement (LPA) and the big role management companies play in VC. Chapter 5, pt. 1: VC regulations Get familiar with the regulatory landscape by knowing its areas of focus, registration requirements, and exemptions. Chapter 5, pt. 2: VC regulations We start our journey into the world of exemptions and learn the roles of beneficial owners and accredited investors. Chapter 5, pt. 3: VC regulations We end our course by taking a deeper dive into exemptions (including S.E.C. regulation D) and blue sky laws.