Private Funds

What this video covers

• The small-investor private-fund exemption (100 beneficial owners, typically accredited) and the qualified-purchaser private-fund exemption (no investor limit, every investor must be a qualified purchaser)
• The accredited investor memory aid 1-2-3: $1 million net worth excluding primary residence, $200,000 individual income, or $300,000 joint income over the prior two years, plus automatic status for holders of Series 7, Series 65, or Series 82 in good standing
• The qualified purchaser threshold: $5 million in investments for individuals, $25 million for entities, and why net worth does not qualify
• Why the $6 million house plus $2 million investments scenario fails the qualified purchaser test, and why a qualified purchaser fund cannot admit merely accredited investors
• Hedge fund structure as limited partnership, the 2 and 20 fee model, long/short equity as the most common strategy, and how lock-up periods create investor liquidity risk while protecting the manager from forced selling
• Private equity versus venture capital: capital calls over years two through five, exits in years seven to ten or beyond via IPO or sale, and the 250-investor exception for qualifying venture capital funds at $12 million or less in aggregate capital
• How to categorize a client profile across hedge funds (liquid public-market strategies, ongoing life), private equity (mature companies, 7-10 year fund life), and venture capital (early-stage startups, 10+ year fund life)