Week 23: FINRA Carte Blanche
Should you collect FINRA licenses like Pokémon cards?
Housekeeping
Welcome to another week of No NDA Required. We’re here to fill the void that exists between emerging fund managers.
I have successfully wrapped with Yossi Farro. What’s next on the bucket list? Be on an episode of TBPN. Coming soon.
I am nuking the Slack community. It flopped.
As always, please hit me back with feedback and comments—I’m constantly seeking ways to make this newsletter a more valuable read.
Diving right in and keeping things brief:
On my radar:
Have your portcos apply to Distilled Intelligence here. Be sure to have them name-drop NNR!
If you’re an investor, shoot me an email here and we’ll get you on the ticket pre-order list.
Heading up to SF tomorrow — will have some free time Friday morning for coffee chats.
I’ve been eating BOLD Bars like there’s no tomorrow. Order some here, if they aren’t sold out.
The main idea:
This disclaimer will always be here: I am not an attorney. I am not an authoritative source. Question everything you read on the internet. Trust but verify. Do not listen to me. More importantly, do not sue me. Thanks!
Securities licenses for fund managers
Let’s dive into this week's topic: Securities Licenses: the Series 7, 63, 65, CFA, CAIA alphabet soup. Do you, as a venture capital fund manager, really need to care about this stuff? How do licenses affect you, your fund, regulatory filings, your liquidity, and possibly even create some extra income?
Context
In finance, credentials like the Series 7, CFA, and CAIA aren’t just resume boosters—they define what you can legally do, who oversees your work, and where you sit in the broader ecosystem. Some, like the Series 7 or 63, are licenses. You need them if you’re selling securities or giving advice, and they’re regulated by FINRA or state agencies. Getting licensed requires sponsorship from a registered firm and passing the right exams.
Others, like the CFA or CAIA, are designations. They’re not legally required, but they carry serious weight. The CFA signals deep expertise in public markets; the CAIA does the same for alternatives. Both take years of study, multiple exams, and ongoing membership to maintain.
In practice, Series licenses are common for brokers and retail advisors. CFAs show up most in research and portfolio management. CAIAs are often found in private markets and hedge funds. Fund managers themselves might not need a license to run a fund—but understanding who does, and what each credential allows, is key to navigating capital markets and staying compliant.
License types
There’s no end to the different kinds of licenses, certifications, or designations. Here are some of the options:
Series 7 License: Allows the holder to buy and sell a broad range of securities products.
Series 63 License: Covers state securities laws and permits the sale of securities within a state.
Series 65 License: Qualifies individuals as investment adviser representatives, focusing on investment strategies and ethics.
Series 66 License: Combines aspects of Series 63 and 65, for those with a Series 7, covering state securities laws and investment advice.
Series 79 License: Qualifies professionals for investment banking activities including mergers, acquisitions, and securities offerings.
Series 82 License: Specifically permits representatives to conduct private securities offerings.
Chartered Financial Analyst (CFA): Recognized globally, focusing on investment analysis and portfolio management.
Chartered Alternative Investment Analyst (CAIA): Specializes in alternative investments, including hedge funds and private equity.
Certified Investment Management Analyst (CIMA): Focuses on advanced portfolio construction and wealth management strategies.
Certified Portfolio Manager (CPM): Provides training in portfolio management through a structured education program.
Certified Fund Manager (CFM): Concentrates on fund management skills, including investment analysis and fund administration.
You could spend a whole lifetime studying for and taking these exams. But which ones are actually necessary, and which ones might actually hurt you by having them?
The most common ones
The most common licenses that fund managers have are:
Series 7/63
Having both the Series 7 and Series 63 licenses allows a person to legally sell securities (or ownership in a blind-pool fund like a venture fund) and earn commissions on those sales (also called a success fee).
Stock brokers, placement agents, brokers of secondary transactions, and investment bankers are the crowd who usually have their 7/63.
Think about broker-dealers. They take a commission on money they raise for you or they take a fee when selling securities on the secondary market. That’s really what this license is for.
Series 65
The Series 65 License allows a person to provide investment advice to the general public and manage assets for a fee, rather than earning commissions from managing, buying, or selling securities.
The people who usually have their 65 are wealth managers, investment advisers, or financial planners. In some states, having a CFP can replace the need for having a 65.
The key here is that a Series 65 allows you to give this advice to the general public. Think about your money manager or an advisor who you pay a few thousand bucks a month to tell you how and what to invest your money in.
CAIA
The Chartered Alternative Investment Analyst (CAIA) designation is designed for professionals who want to dig deeper into the world of alternative investments—think hedge funds, private equity, venture capital, real estate, and commodities. It helps you build the skills to put together well-diversified portfolios, tackle complex risk, run solid due diligence, and analyze investments at a high level.
It is not a license, but rather a designation. It doesn’t give you any more power or ability, it just signals that you know what you’re talking about.
CFA
The Chartered Financial Analyst (CFA) designation is one of the most popular credentials globally. It’s similar to the CAIA, but more broad (and less about alternative investments). There’s debates about the actual value of the CFA, or if it’s more just a flex.
Like the CAIA, it is just a designation.
In some states, it might replace the Series 65.
TLDR:
Series 7 & 63 → securities sales & broker-dealer activities.
Series 65 → investment advisory services (more common/valuable for venture fund managers).
CFA/CAIA → respected credentials, but not regulatory licenses.
Often times, the folks who came from more “hard finance” backgrounds like ex-investment bankers or ex-placement agents are the fund managers who have their licenses. If you don’t already have them, there’s little benefit to getting them.
Are any of these necessary?
The short answer is: no. In fact, most venture fund managers don’t have any of these licenses or designations. Why you don’t need any of them is because:
You're probably managing a private fund with qualified investors.
You aren't selling alongside a broker-dealer.
You typically don’t transact publicly-traded securities directly (you're making private company investments).
What do you gain or lose by getting these licenses?
Benefits:
Series 65:
You can raise money from non-accredited investors if you’re registered in certain states. This allows you to side skirt 506(b)/506(c) limitations when managing small SPVs or syndicates.
It allows you to advise on things like rolling funds or founder secondaries without having a broker-dealer actually help you (and taking a cut).
It can let you charge separate advisory fees for SPVs, or with consulting work. You can be advising someone on how to be making investments into alternative securities, and getting paid for it.
If you’re running SPVs without a traditional fund structure, which is typical for solo GPs or early-stage platforms, having a 65 lets you legally manage investor capital and charge fees, all without the complexity of a full fund or the need for a fund administrator.
You can use your 65 to charge advisory fees for VC investments, building your investing track record pre-fund.
Series 7/63:
Help others (your portcos, your friends who are fund managers, etc.) fundraise, and also get compensated for it with either carry, a retainer, or a performance/success fee (commission).
You can sell your fund’s interests on the secondary markets without having to shell out a few percent to a broker-dealer. It can help you squeeze liquidity before a wider liquidity event. Yay DPI!
You can provide opportunistic opportunities (is that silly to say?) to your LPs. What I mean is: if you want to create access vehicles around late-stage secondaries or secondary LP interests (esp. in hot rounds), 7/63 allows you to do so, without relying on an external placement agent.
CFA and CAIA
Having a CFA or CAIA can give some institutional LPs some confidence knowing that your team knows what it’s doing when it comes to diligence. Some institutional LPs might even use it as screening criteria when putting a fund through their IC.
It can be really helpful knowledge if your fund has annual audits. It gives you insight into what the auditors might be looking for, and can help give you a confidence boost that you’re not doing anything wonky from a compliance perspective.
If you’re building a team and don’t yet have a full-time CFO, having someone with a CFA or CAIA can give you a proxy set of internal standards for valuation, reporting, risk management, etc. It de-risks internal ops while you’re still lean, and will keep your attorney happy.
Downsides:
Series 65
If you have your 65, you become an RIA. If you register as an RIA, you’re no longer exempt under the Exempt Reporting Adviser (ERA) rule. That means full ADV filings, surprise exams, annual updates, and regulatory scrutiny — even for a small fund. Could be expensive, and definitely really sucks.
Advising non-accrediteds can jeopardize 3(c)(1) status. Under Reg D, 3(c)(1) funds can accept up to 35 non-accredited investors only if those investors are passive and not receiving individualized investment advice. If you’re a Registered Investment Adviser (via Series 65) and provide advisory services to non-accredited investors, such as recommending specific fund investments, they may be reclassified as advisory clients rather than passive LPs. This can blow your Reg D exemption, trigger fiduciary obligations, and expose you to RIA custody rule issues and SEC audits unless carefully structured with proper disclosures and separation of roles.
Series 7/63
Series 7 and 63 aren’t standalone credentials — they’re only valid if you’re actively registered with a FINRA-member broker-dealer, which takes on responsibility for supervising all securities-related activity, including investor communications, marketing, and deal execution. This affiliation comes with real operational overhead: compliance reviews, pre-approvals, communication logs, continuing education, and monthly fees that often run $1K–$5K+. Without that active broker-dealer sponsorship, your license lapses and you lose the legal ability to raise capital, sell fund interests, or receive compensation tied to a deal.
LPs may question whether you’re acting in their best interests or just earning commissions. For example, your LPs might think you’re selling prematurely just so you can take a 2% brokerage fee for selling the fund’s securities on the secondary. It can create optics issues or even legal ones if you don’t disclose properly.
CFA and CAIA
There’s no real legal upside. These don’t help you avoid audits, raise from new investor classes, or reduce regulatory friction. They’re expensive, time-consuming, and mostly brand-oriented.
Because it’s so brand-oriented, you might get clowned by founders and other fund managers. You know what I mean here — there’s a certain cool kid, laissez-faire attitude you have to have as a VC, and having a CAIA designation next to your name on LinkedIn is the absolute opposite of that.
All this in practice:
Most fund managers don’t need to be licensed — and in a lot of cases, chasing credentials can add more complexity than value. Unless you’re actively managing outside capital beyond your main fund (like SPVs, rolling funds, secondaries, or advisory work), it’s usually smarter to stay lean, stick with ERA status, and focus on performance and your story.
If you’re looking to unlock new revenue streams, here’s the general playbook:
Series 65 can let you charge for advisory or run non-fund syndicates legally. Just watch the state-by-state AUM thresholds so you don’t accidentally trigger full SEC RIA registration.
Skip Series 7/63 — if you’re trying to monetize deal flow or structure founder secondaries, it’s easier to partner with someone who already has a broker-dealer license.
CFA/CAIA aren’t essential unless your LPs care about institutional credentials or you’re doing public markets/research work. They won’t reduce compliance risk, and they don’t unlock capital on their own.
If you’re after clean, low-friction income, set up lightweight SPVs, offer structured access to deal overflow, or provide portfolio advisory under safe harbor rules. Just keep it transparent and clearly separate from fund activity — LPs won’t blink if it feels aligned. If your LPA allows it, maybe get involved with some of your portcos (or their friends) on a consulting level!
Icing on the Cake:
Distilled Intelligence! Want to raise money? Come to Distilled Intelligence. Want to source great companies? Come to Distilled Intelligence. Want to help your portcos succeed? Tell them to come to Distilled Intelligence.
Some cool stuff on my radar
Here is this week’s pocket dump:
This Logitech smart light that takes your Zoom calls to the next level and automatically turns on when you start calls.
Chorus, the AI multitool. I’ll have a promo code for you next week, hopefully.
Summer is coming, so this wearable UV monitor might be helpful.
Closing
Thanks for taking time out of your Wednesday to read.
As always, you can find me on X and LinkedIn, and I’d love to hear from you via email. If you want to learn more about me, the best place to do so is at kia.vc. Whether it’s talking startups or just shooting the shit, I’m always happy to connect.
Onto the next!
//Eli