The INVEST Act Just Passed The House — What It Could Mean For Venture Funds (And Their Advisers)

February 5, 2026  |  By

On December 11, 2025, the U.S. House of Representatives passed H.R. 3383, the Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025 (the “INVEST Act”) by a 302–123 vote.

Please note that this is not law yet. The bill still needs to clear the Senate and be signed. But the House version gives a pretty clear signal of where policymakers want to go: make it easier to raise capital, expand access to private markets, and tweak the rules that shape how venture funds operate.

Below is a summary of the INVEST Act provisions that I think matter most for venture fund managers.

“Qualifying Venture Capital Funds” Could Get Bigger

One of the most venture-relevant changes is buried in a deceptively simple update: the INVEST Act would expand the parameters for a “qualifying venture capital fund” by:

  • raising the beneficial owner cap from 250 to 500 persons, and
  • raising the capital cap from $10M to $50M.

This increase in both investor count and total capital size could give managers the ability to take smaller checks and still raise a sizeable fund.

And yes, venture managers already have other routes (including the 3(c)(7) world), but those routes come with their own constraints, such as requiring all investors to meet the high “Qualified Purchaser” standard. This is a meaningful nudge toward letting early-stage funds scale to where the market actually is in 2026.

The SEC Would Be Required to Modernize Parts of the “Venture Capital Fund” Definition

(Hello, Secondaries and Fund of Fund Investing)

The INVEST Act doesn’t just expand the investor/capital caps—it also pushes the SEC to revise parts of the regulatory definition around venture capital funds under Rule 203(l)-1.

Specifically, within 180 days after enactment, the SEC would be directed to revise the “qualifying investment” concept to include:

  • equity securities acquired directly or in a secondary acquisition, and
  • investments in another venture capital fund as a qualifying investment.

At the same time, the bill would add a new portfolio construction constraint: as a condition to qualify as a venture capital fund, immediately after any acquisition the fund must hold no more than 49% of aggregate capital contributions and uncalled committed capital (excluding short-term holdings) in (a) other VC funds or (b) qualifying investments acquired in a secondary acquisition.

This means there could be more flexibility, but with a math test. This could be a meaningful change to venture funds that make more than one investment, but anytime we add a numerical guardrail, we add a compliance burden.

“Accredited Investor” Definition Changes

The INVEST Act would make two material changes that would affect natural person investors:

  • It would adjust the net worth for inflation annually; and
  • It would allow individuals to qualify by taking a free SEC-created examination.

The takeaway is that Congress (and potentially the SEC) is signaling that wealth isn’t the only proxy for sophistication. For venture funds, it may widen the pool of individuals who can legally participate in private offerings, while also creating a new “implementation” question—what the exam looks like, how quickly it rolls out, and whether managers still set internal suitability standards beyond the legal minimum.

The “Private Fund Adviser Exemption” Threshold Would Increase

(And Get Inflation Indexing)

For investment advisers, a notable change is the proposed increase to the private fund adviser exemption threshold under the Investment Advisers Act:

  • from $150M to $175M, and
  • with an inflation adjustment every 5 years.

This change could have real impact:

  • Some managers intentionally stay under certain thresholds to manage registration obligations and compliance overhead.
  • A higher threshold can mean more runway for smaller advisers before SEC registration becomes mandatory (depending on the adviser’s facts and circumstances).
  • The inflation indexing is also telling: the goal is to stop the threshold from becoming outdated again in a few years.

“Demo Day” / Sponsored-Event Pitching Could Get a Clearer Safe Harbor (With Conditions)

The INVEST Act would require the SEC to revise Regulation D so that the general solicitation prohibition would not apply to certain issuer presentations made at specific sponsored events (think universities, nonprofits, angel groups, accelerators/incubators, venture forums, and similar).

There are strings attached—like limits on event advertising, sponsor conduct, no specific information regarding an offering, and no compensation for making introductions between the investors attending and issuers. Importantly: attending one of these events does not, by itself, create a “pre-existing substantive relationship” for Rule 506(b) purposes.

This change could help reduce the “are we accidentally doing general solicitation?” anxiety that pops up around pitch events, demo days, and ecosystem showcases—assuming the event fits the conditions. However, this will not be a free pass – there are several limitations and guidelines proposed – but it does give more comfort to presenting. For advisers who sponsor or participate in events, the bill is also explicit that certain compensation could implicate broker-dealer or adviser registration issues (so it’s not a free-for-all).

If this moves forward, it’s worth reviewing how you structure founder events, who is “sponsoring,” what gets advertised, and what gets distributed. This is one of those areas where the facts matter.

Final Thoughts

The INVEST Act is another reminder that the private fund world isn’t static — and venture sits squarely at the intersection of capital formation and investor access, with guardrails. If enacted, the bill could provide additional flexibility around venture fund size, what qualifies as a venture investment (including certain secondaries and VC fund investments), and how individuals can qualify as accredited investors.

It’s not law yet, and key provisions would still require SEC implementation — but managers and advisers can use this as a planning prompt now: review which exemptions you rely on, how much secondaries exposure you have (or may have), and whether your fundraising model could benefit from a broader accredited investor pathway.

Posted in: Private Fund

About the Author(s)

Rebecca Carpenter

Rebecca Carpenter is Senior Counsel at Vela Wood. She focuses her practice on advising private fund and venture capital fund managers on a wide variety of business manners including formation, analysis of investments, and securities and regulatory matters.

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