3(c)(1) vs 3(c)(7) Funds: What’s the Difference?

Most U.S. private funds avoid registering as investment companies by relying on one of two exclusions in the Investment Company Act: Section 3(c)(1) or Section 3(c)(7). You will see both referenced on nearly every fund page in this database.

A 3(c)(1) fund is limited to 100 beneficial owners (or 250 for certain qualifying venture capital funds). It can accept “accredited investors,” a relatively broad category.

A 3(c)(7) fund has no hard cap on the number of investors but may only admit “qualified purchasers” — generally individuals with at least $5 million in investments or institutions with at least $25 million. This is why large institutional funds usually rely on 3(c)(7).

On each fund page we show which exclusion the manager reported on Form ADV.

You can look up any of these facts for a specific firm using the search.