INVEST Act: Where It Stands and What It Could Change for Investors and Startups

On December 15, 2025, the US House of Representatives passed the Incentivizing New Ventures and Economic Strength Through Capital Formation (INVEST) Act. Before it becomes law, the bill must clear the Senate and receive the President’s signature. That being said, this act contains certain extremely consequential provisions for founders, investors, and managers.

The INVEST Act is the latest chapter in a long-running US legislative effort to reform capital markets in favor of small businesses and broader investor participation.

This lineage includes the JOBS Act of 2012, the Fixing America’s Surface Transportation Act of 2015, the JOBS and Investor Confidence Act of 2018, and the package of 29 capital markets provisions announced in 2022, commonly known as JOBS Act 4.0. Each iteration expanded access, eased specific regulations, and attempted to balance economic growth with investor protection.

The INVEST Act continues this tradition with the following core objectives:

• Expanding small businesses’ access to capital markets
• Promoting retail investor participation in private markets
• Facilitating certain investor protections
• Making it easier for companies to go public and remain public

Provisions of the INVEST Act That Could Reshape Capital Markets

The INVEST Act’s reach spans a wide range of market participants, from venture capital fund managers and investment advisors to individual investors and early-stage founders. The provisions below illustrate just how broad that impact could be.

Closed-End Funds Gain Greater Private Market Access

Closed-end funds (CEFs) have historically operated under tight restrictions on their private market exposure. The SEC’s informal position capped CEF allocations to private funds at 15% of assets, while listed CEFs were prohibited from investing in private funds altogether.

Section 206 of the INVEST Act codifies the removal of these limits. By doing so, it opens the door for CEFs to increase their exposure to private market assets, which have historically delivered higher returns than public counterparts, albeit with greater illiquidity.

For retail investors who access private market strategies through listed CEFs, this provision could meaningfully expand the range and depth of investment options available to them.

Who Can Be an Accredited Investor Is About to Get Broader

Under current rules, accredited investor status is largely a function of wealth. The INVEST Act proposes two distinct expansions to this definition.

Section 201 allows individuals with relevant professional expertise to qualify as accredited investors regardless of whether they meet the existing wealth thresholds. Section 203 goes further by directing the SEC to develop an exam that, once passed, grants accredited investor status. This shifts the qualification framework from purely wealth-based to one that also recognizes financial sophistication.

In practice, it could open private market investments to a broader base of knowledgeable investors who have historically been locked out due to income or net worth alone.

Venture Capital Funds Get More Room to Grow Without Registering

VC funds currently benefit from an SEC registration exemption when they manage assets under $10 million for fewer than 250 beneficial owners. This threshold reduces the regulatory burden on smaller managers, allowing them to focus on investing rather than compliance.

Section 108 raises these thresholds substantially to 500 investors and $50 million. This change acknowledges that the cost of full SEC registration has become disproportionate for funds that have grown modestly over time. A wider cohort of VC managers would now have room to scale without triggering the compliance overhead of formal registration.

From the perspective of investors, this could be beneficial because it lowers barriers to entry for emerging fund managers and increases competition in the VC landscape.

Fewer Investment Advisors Will Need to Register with the SEC

Currently, the venture capital exemption from investment advisor registration applies only to managers who make direct investments into private companies. This narrow definition excludes managers who run funds of funds or participate in secondary market transactions, two increasingly common strategies in modern private markets.

Section 109 expands the definition of qualifying investments to include both secondary market investments and fund of funds management. The downstream effects are twofold. First, fewer managers will need to navigate the ongoing compliance burden of SEC registration as investment advisors. Second, and perhaps more importantly, SEC-registered investment advisors must restrict their investor base to qualified clients who are individuals with a net worth above $2.2 million.

Managers who fall outside the registration requirement gain the flexibility to accept a broader investor base. As a result, this section can potentially extend access to VC fund strategies well beyond the ultra-high-net-worth segment.

Startups Can Promote Themselves More Freely at Pitch Events

Section 102 directs the SEC to exempt specific startup promotional events from the general solicitation restrictions that govern Regulation D offerings. Under current rules, broadly promoting a funding round at events like pitch competitions and demo days can trigger Regulation D’s general solicitation requirements, which carry their own compliance implications.

This provision reduces friction at one of the most common early touchpoints between founders and investors. For pre-seed and seed-stage startups that rely on these events for investor discovery, the change is meaningful.

Eqvista – Turning Regulatory Change into Strategic Advantage!

If signed into law, the INVEST Act would represent the most significant update to US capital markets regulation since JOBS Act 4.0, with implications spanning CEF investment mandates, accredited investor definitions, VC fund structures, and startup fundraising mechanics. For founders, fund managers, and investors, the changes are extremely consequential.

Navigating these shifts requires more than awareness. It requires timely, accurate valuation and equity management that keeps pace with an evolving regulatory landscape. Whether you are a VC manager reassessing your fund structure in light of new registration thresholds, a startup preparing for investor outreach under revised solicitation rules, or an investor evaluating expanded private market access, Eqvista provides the data-backed insights and tools you need to act with confidence.

Contact us to learn more about how we can support your equity and capital markets decisions as the regulatory environment continues to evolve!