In mid-December 2025, the U.S. House of Representatives passed the INVEST Act – aimed at providing more investors with the opportunity to invest in private funds and at promoting private capital reaches into entrepreneurs in rural areas. If passed by the Senate and signed into law, the INVEST Act could spur increased private investment fund formation and potentially flow through to increased start-up and emerging company investment.
As currently drafted, the bill calls for revising Regulation D to allow issuers to communicate at events sponsored by governmental entities, higher education entities, nonprofits, angel investor groups, incubators/accelerators, and venture capital or formation trade organizations without running afoul of marketing prohibitions. This carve-out is subject to additional conditions about the sponsor avoiding investment recommendations, participating in negotiations, charging attendees fees or receipt of commissions, along with the use of written disclosures. Under these circumstances, the issuer would be permitted to communicate that it is in the process of offering securities, including the type and amount of such securities, the amount of offering that has already been subscribed, and the intended use of the proceeds of the offering.
The bill would also broaden who may be considered an Exempt Reporting Adviser by increasing the assets under management threshold and simplifying compliance.
Additionally, the definition of qualifying venture capital funds under the Investment Company Act 3(c)(1) would be amended to double the number of persons that may invest and quintuple aggregate capital contributions to $50,000,000. Further, it would broaden qualifying investments for purposes of the definition of a qualifying venture capital fund.
A modification is aimed at permitting more persons to qualify as “accredited investors” under the Securities Act of 1933. New qualifications would include persons who pass the knowledge test the U.S. Securities and Exchange Commission (SEC) would establish to determine financial sophistication and competency with respect to:
- different types of securities;
- disclosure requirements;
- corporate governance;
- financial statements;
- characteristics of unregistered securities, such as:
- limited liquidity, limited disclosure, variability in valuation tools, information asymmetry leverage risks, concentration risks, and longer investment horizons;
- potential conflicts of interest; and
- other criteria determined by the SEC.
The bill would also permit the SEC to adjust the income and net-worth thresholds over time for inflation.
Our Private Equity & Venture Finance lawyers will continue following this bill and its potential impact on private markets. If you have questions regarding the INVEST Act or private fund formation generally, please contact Allie Itami, David Kim or Jane Trueper, or your regular Lathrop GPM attorney.