Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025
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The INVEST Act of 2025 is a broad capital markets reform package that would expand small-business capital access, widen the pool of investors eligible for private offerings, and modernize the IPO process — making dozens of targeted amendments to major federal securities laws.
It would, among other things, let closed-end investment funds invest freely in private funds, extend confidential draft-registration and 'testing the waters' privileges to all issuers (not just emerging growth companies), and create a new SEC-administered exam through which any individual could qualify as an accredited investor.
What this bill would do
What it would do
The INVEST Act of 2025 is a comprehensive, multi-title capital markets reform bill. Title I would expand small business capital access by exempting certain angel investor events from securities general solicitation restrictions, raising crowdfunding intermediary financial thresholds from $100,000 to $250,000, increasing the qualifying venture capital fund investor limit from 250 to 500 persons, and raising the exempt investment adviser assets-under-management threshold from $150 million to $175 million — with future inflation adjustments. It would also direct the SEC to study its "small entity" definition and to expand Small Business offices within three SEC divisions.
Title II would expand the accredited investor definition to include licensed brokers and investment advisers and anyone who passes a new free SEC-administered financial competency exam, direct the SEC to allow electronic delivery of regulatory documents, and create a Senior Investor Taskforce within the SEC. Title III would extend confidential draft registration statements and "testing the waters" pre-IPO communications to all issuers, prohibit the SEC and national securities exchanges from restricting closed-end funds from investing in private funds, and require companies with multi-class share structures to disclose per-person voting power percentages to shareholders.
Key provisions
- 1Would exempt issuer presentations at qualified angel investor, incubator, government-sponsored, and nonprofit events from Regulation D's general solicitation prohibition, subject to specific sponsor and content conditions.
- 2Would raise the crowdfunding intermediary financial review threshold from $100,000 to $250,000, with SEC discretion to increase it further to $400,000.
- 3Would increase the qualifying venture capital fund investor limit from 250 to 500 persons and the assets-under-management threshold from $10 million to $50 million.
- 4Would expand the accredited investor definition to include licensed brokers and investment advisers in good standing, and any individual certified through a new free SEC-administered financial competency exam.
- 5Would direct the SEC to establish a free accredited investor certification exam, administered by FINRA, covering securities types, private offering risks, corporate governance, and conflicts of interest.
- 6Would prohibit the SEC and national securities exchanges from restricting closed-end companies — including business development companies — from investing in private funds or listing their securities based on such investments.
- 7Would extend confidential draft registration statement review and 'testing the waters' pre-offering communications — previously limited to emerging growth companies — to all issuers.
Who would be affected
Small businesses and startups seeking capital, angel investors and venture capital funds, individuals seeking accredited investor status, investment advisers near the exemption threshold, closed-end funds and business development companies seeking to access private markets, companies planning IPOs or exchange listings, registered investment companies, senior investors age 65 and older, and any financial intermediary required to deliver regulatory documents to investors.
Why it matters
If enacted, individuals with financial expertise but modest wealth could gain accredited investor status through a free exam rather than net worth alone — opening private offerings to a wider group. Startups and small funds would face fewer regulatory barriers to raising capital. Closed-end funds could shift more assets into private markets. Companies considering IPOs would gain more flexibility in pre-offering communications and confidential SEC review.
What would change
Changes to existing law
Amends Investment Company Act of 1940, Section 5 (Sec. 206)
Prohibits the SEC from limiting closed-end companies, including business development companies, from investing in private funds or listing their securities based on such investments.
Amends Securities Act of 1933, Section 2(a)(15) (Sec. 201)
Expands the accredited investor definition to include licensed brokers and investment advisers in good standing and individuals certified through the new SEC competency exam; adds inflation adjustments to income and net worth thresholds.
Amends Investment Company Act of 1940, Section 3(c)(1) (Sec. 108)
Raises the qualifying venture capital fund beneficial owner limit from 250 to 500 persons and the assets threshold from $10 million to $50 million.
Amends Securities Act of 1933, Section 5(d) (Sec. 303)
Extends 'testing the waters' pre-offering communications rights to all issuers, removing the prior limitation to emerging growth companies.
Amends Securities Act of 1933, Section 4A (Sec. 103)
Raises the financial review threshold for crowdfunding intermediaries from $100,000 to $250,000, with SEC discretion to raise it to $400,000.
Amends Investment Advisers Act of 1940, Section 203(m) (Sec. 104)
Raises the exempt reporting adviser assets-under-management threshold from $150 million to $175 million and requires five-year inflation adjustments.
Amends Securities Exchange Act of 1934, Section 14 (Sec. 307)
Requires companies with multi-class share structures to disclose percentage share ownership and voting power of directors, director nominees, named executives, and 5%-plus shareholders in proxy materials.
Agencies directed to act
Effective dates
- SEC to revise Regulation D to exempt qualified angel investor event presentations from general solicitation ban
- SEC to revise venture capital fund definition rules, including secondary acquisition and fund-of-funds provisions
- SEC to revise accredited investor definition under Regulation D to conform with expanded categories
- SEC to establish accredited investor competency examination
- SEC to finalize electronic delivery rules for investor regulatory documents
- GAO report on small- and medium-company IPO costs due to Congress
Funding and costs
Congressional Budget Office estimate
CBO estimates H.R. 3383 would have no significant effect on the federal deficit, with zero impact on direct spending or revenues over the 2026–2035 period.
CBO estimates that H.R. 3383 would have no effect on direct spending (mandatory outlays) or revenues over the 2026–2035 scoring window, resulting in no change to the deficit. Discretionary spending — spending that requires annual appropriations — by the Securities and Exchange Commission to implement the bill would be negligible, since the SEC is authorized to collect fees to offset its appropriation costs. The bill imposes private-sector mandates as defined in the Unfunded Mandates Reform Act, but CBO estimates their aggregate cost would not exceed the statutory threshold ($206 million in 2025, adjusted for inflation); no intergovernmental mandates were identified.
How implementation would work
Most implementation falls on the SEC through rulemaking with statutory deadlines: Regulation D angel investor event rules within 6 months, venture capital fund definition revisions within 180 days, accredited investor definition conforming rules within 180 days, and electronic delivery rules proposed within 180 days and finalized within 1 year. The SEC would establish and oversee an accredited investor competency exam, which FINRA (the registered national securities association) would administer free of charge. The GAO would conduct separate studies on senior investor financial exploitation and small- and medium-company IPO costs. A new Senior Investor Taskforce within the SEC would issue biennial reports to Congress for 10 years.
Legislative status & sources
Latest action
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Official CRS summary
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This bill allows a closed-end fund—a portfolio of pooled assets with a limited number of shares traded on an exchange—to increase its investment in private investment funds. Specifically, the Securities and Exchange Commission is prohibited from limiting the sale or listing of securities of a closed-end fund that invests in private investment funds. This bill also apples to a closed-end company treated as a business development company.
Legislative subjects
Banking and financial institutions regulation; Finance and Financial Sector; Financial services and investments; Securities
Committee report
H. Rept. 119-169