Investment fund structures can be confusing. Two common options are 3(c)(1) and 3(c)(7) funds. These numbers refer to sections of the Investment Company Act. Each has different rules about who can invest and how many investors you can have.
3(c)(1) funds can have up to 100 investors. These investors can be accredited or non-accredited. This gives you more flexibility in who can invest. But the 100-person limit can be restrictive for larger funds.
3(c)(7) funds can have up to 2,000 investors. But all investors must be “qualified purchasers.” This means they need to have at least $5 million in investments. This is a much higher bar than just being accredited.
Moschetti Syndication Law helps you choose between these structures. The decision depends on your target investors and fundraising goals. The firm explains the trade-offs clearly.
“We were confused about whether to use 3(c)(1) or 3(c)(7) for our fund. Tilden explained the differences clearly and helped us pick the right structure for our investor base. The choice made our fundraising much more efficient.” – H.W.
The firm’s documents are structured appropriately for each type. 3(c)(1) and 3(c)(7) funds have different compliance requirements. Moschetti ensures your documents match your chosen structure.
These structures affect how you market your fund. 3(c)(1) funds have more restrictions on general solicitation. The firm helps you understand what marketing approaches are allowed.
Tax implications also differ between the structures. Moschetti works with tax advisors to help you choose the most efficient approach for your situation.
For sponsors choosing between 3(c)(1) and 3(c)(7) fund structures, Moschetti Syndication Law provides clear guidance to help you make the right decision for your investment strategy.
