Fenwick’s Byron Dailey Discusses Changing Venture Capital Investments in The Wall Street Journal

Fenwick private investment funds practice chair Byron Dailey talked to The Wall Street Journal about the recent trend of venture firms changing their regulatory status and registering as investment advisers with the U.S. Securities and Exchange Commission (SEC).

Such a change would allow firms to make more investments outside of the traditional purview of venture capital, but would then come with new compliance burdens.

As venture firms seek to invest more in assets such as cryptocurrency, public stocks, secondary buying of private-company shares and other venture funds, they might no longer qualify for the venture-capital exemption and must become registered investment advisers, Dailey told the publication.

“What’s happening is we are seeing more funds, especially bigger funds, that are deciding they don’t want to be hemmed in by having 80 percent of their assets be venture capital qualified investments,” he said.

He further noted that there are two ways of looking at the trend: “Either the VC industry is in some ways becoming less VC—or the SEC’s definition of what VC is, is a little too limited.”

Read the full article in The Wall Street Journal (subscription required).​​