SEC Division of Trading and Markets no-action letter: FundersClub Inc. and FundersClub Management LLC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

DIVISION OF March 26, 2013 TRADING AND MARKETS W. Hardy Callcott, Esq.

Bingham McCutchen LLP

Three Embarcadero Center

San Francisco, CA 94111-4067

Re: FundersClub Inc. and FundersClub Management LLC Dear Mr. Callcott:
In your letter dated March 22, 2013, on behalf ofFundersClub Inc.
("FundersClub") and FundersClub Management LLC ("PC Management"), you request assurance from the staff ofthe Division ofTrading and Markets (the "Staff') that it will not recommend enforcement action to the U.S. Securities and Exchange Commission (the "SEC" or "Commission") under Section 15( a)(l) of the Securities Exchange Act of 1934 (the "Exchange Act") against FundersClub and FC Management if they were to engage in the activities described in your letter without registering as a broker or dealer in accordance with Section 15(b) ofthe Exchange Act. Based on your letter, we understand the facts to be as follows:
FundersClub is a Delaware corporation, and venture capital fund adviser that solely advises venture capital funds as defined in Rule 203(1)-(1) under the Investment Advisers Act of
1940. FundersClub also operates the www.thefundersclub.com website.
FC Management, a wholly owned subsidiary of FundersClub, is a Delaware limited liability company and is also a venture capital fund adviser. You state that FC Management manages a series of Delaware limited liability company investment funds, each of which is formed for the purpose ofinvesting in the securities ofone or more start-up companies. You indicate that FundersClub and PC Management collectively identify and perform due diligence on start-up companies for which FC Management may wish to form investment funds. Once FC Management decides to invest in a start-up company, it enters into a non-binding agreement with that company setting a target amount of capital for which FC Management will invest. FundersClub then posts information provided by the start-up company on www.thefundersclub.com. Such information is available online only to FundersClub members, all of whom must be accredited investors as defined in Rule 501 ofRegulation D. FundersClub members may submit non-binding indications ofinterest in an investment fund offered on its website in accordance with Rule 506. When interest in an investment fund reaches sufficient level to fund the target amount originally agreed upon between FundersClub and the start-up company (or if the company agrees to increase the target level of capital), FundersClub closes the indication ofinterest process. FundersCiub then reconfirms investors' interest and accredited investor status, and negotiates the final terms of the investment fund's