In order for an SPV to not be subject to the Investment Company Act of 1940, the SPV must comply with various exemptions. The 3(c)(7) exemption states that no more than 2000 qualified purchaser investors can participate in the SPV. An SPV that is using the 3(c)(7) exemption cannot have a single “accredited investor” but all of the investors must be qualified purchasers. Rule 506 of Regulation D (506(b) and 506(c) Offering) is often paired with the 3(c)(1) and 3(c)(7) exemption.
Read more: https://www.strictlybusinesslawblog.com/2017/09/21/3c1-funds-vs-3c7-funds/