As we were writing these posts, “rolling funds” became a topic of conversation on “VC Twitter”. Ignoring the “rolling” part for a second, these are simply funds marketed publicly – and so have to use the 506(c) exemption.
Although supposedly “revolutionary”, using 506(c) really isn’t that novel any more. Lots of small, first time funds know and used the 506(c) rules over the last few years.
A certain angel group raised the VentureSouth Angel Fund, which was back then called the Palmetto Angel 2014 Fund, using the 506(c) rules that were just being finalized.
(As you can see in our old Form D, filed with the “First Sale Yet to Occur” box checked, we weren’t sure if a Form D for a 506(c) had to be filed before fundraising began. It doesn’t – has to be within 15 days of the first sale – but we wanted to be cautious.)
We might come back to discussing rolling funds in future posts, but for now just be aware that one of their key attractions (for fund managers) of being publicly “marketable” is true of ANY investment fund that is comfortable using the 506(c) rules.