The House passed the most significant capital formation bill in over a decade on December 11, 2025. H.R. 3383, the INVEST Act, cleared by a 302-123 vote and now heads to the Senate. If you're planning a fundraise in the next 12 months, the rules you've been operating under are about to change.
This isn't incremental tinkering. The bill combines over 20 separate capital formation measures. It raises the limits on venture capital funds. It makes it easier to pitch investors at demo days. And it opens up private investment opportunities to a much larger group of people who can prove they understand the risks, even if they don't meet the current wealth requirements.
Here's what's actually changing and what it means for founders, fund managers, and investors.
A Quick Primer: Why These Rules Exist
Before getting into the changes, it helps to understand why these rules exist in the first place.
When a company raises money by selling stock or other securities, federal law generally requires registering with the SEC and providing detailed disclosures. That process is expensive and time-consuming. It's designed to protect everyday investors from fraud by ensuring they have enough information to make informed decisions.
But registration requirements would make it nearly impossible for startups to raise early-stage capital. So the SEC created exemptions that let companies raise money privately, without full registration, as long as they follow certain rules. The most common exemption is called Regulation D (often shortened to "Reg D").
The catch: these exemptions typically limit who can invest. The idea is that wealthy or sophisticated investors can protect themselves and don't need the same level of regulatory protection. That's where the term "accredited investor" comes from.
The INVEST Act changes several of these rules to make private fundraising easier while still maintaining investor protections.
Title I: Making It Easier for Small Businesses to Raise Capital
Bigger Limits for Venture Capital Funds
Under current law, venture capital funds that want to avoid certain regulatory burdens (specifically, registering as an investment company) face strict limits. The fund can't exceed $10 million in committed capital, and it can't have more than 250 investors.
The INVEST Act raises both limits significantly:
| Current Rule | INVEST Act |
|---|---|
| $10 million fund cap | $50 million fund cap |
| 250 investor limit | 500 investor limit |
| 20% allocation to secondaries/fund-of-funds | 49% allocation to secondaries/fund-of-funds |
What this means in practice: Emerging fund managers can raise larger funds and bring in more investors without triggering additional regulatory requirements. The expanded allocation for secondaries (buying stakes in existing funds or companies) and fund-of-funds investments gives managers more flexibility in how they deploy capital.
Demo Day Presentations Get Clearer Protection
If you've ever pitched at a startup accelerator demo day, you may have worried about something called "general solicitation."
Here's the issue: under most private fundraising exemptions, companies can't publicly advertise that they're raising money. Technically, standing on stage at Demo Day telling a room full of potential investors that you're raising a seed round could be considered advertising your securities offering.
The SEC addressed this in 2021 with Rule 148, which created a safe harbor for demo day presentations. The INVEST Act goes further by writing this protection directly into law, making it more durable.
The boundaries matter, though. To stay within the safe harbor, your presentation can only include:
- That you're raising (or planning to raise) money
- What type of security you're offering
- How much you're raising
- What you'll use the money for
You can't get into detailed term negotiations, make specific investment recommendations, or turn the demo day into a sales pitch with pricing discussions. Those conversations need to happen separately.
Higher Thresholds for Crowdfunding Reviews
If you've raised money through equity crowdfunding (Regulation Crowdfunding), you know that offerings above $100,000 require reviewed financial statements from an accountant. That costs money.
The INVEST Act raises that threshold to $250,000, with SEC discretion to go up to $400,000. For founders using crowdfunding as a bridge round or community-building tool, this cuts compliance costs.
Title II: Who Can Invest in Private Companies
This is where the INVEST Act makes its most significant changes. Currently, most private investment opportunities are limited to "accredited investors," which essentially means wealthy individuals or institutions. The INVEST Act expands who qualifies.
Current vs. Future Accredited Investor Qualifications
| Pathway | Current Rules | Under the INVEST Act |
|---|---|---|
| Income | $200,000 individual ($300,000 joint) for past 2 years | Same, but adjusted for inflation |
| Net Worth | $1 million excluding primary residence | Same, but adjusted for inflation |
| Professional Licenses | Series 7, 65, or 82 license holders | Expanded to additional brokers, advisers, financial professionals |
| Education/Experience | Not recognized | SEC to establish criteria for relevant finance background |
| Exam-Based | Not available | SEC must create accreditation exam within 1 year |
| Entity Thresholds | $5 million in assets for most entities | Similar, with potential adjustments |
The New Exam Pathway
This is a big deal. For the first time, individuals will be able to qualify as accredited investors by demonstrating knowledge rather than wealth.
The SEC must create a certification exam within one year of the bill becoming law. The exam will cover:
- Types of securities and how they work
- Disclosure requirements and what to look for
- Corporate governance basics
- How to read financial statements
- Private fund structures and risks
- Liquidity and leverage risks
- Conflicts of interest in private investments
Pass the exam, and you can invest in private offerings regardless of your income or net worth.
Professional Licensure Expansion
In 2020, the SEC added a knowledge-based pathway to accredited investor status. The idea: if you've passed rigorous financial exams and maintain a professional license, you've demonstrated enough sophistication to understand private investment risks, even if you don't meet the wealth thresholds.
Currently, three FINRA-administered licenses qualify:
- Series 7 (General Securities Representative): Allows holders to sell most types of securities
- Series 65 (Investment Adviser Representative): Allows holders to provide investment advice for a fee
- Series 82 (Private Securities Offerings Representative): Allows holders to sell private placements
These licenses are primarily about who can sell or advise on securities. But holding one in good standing also qualifies you to invest as an accredited investor.
The INVEST Act directs the SEC to expand this list significantly. The Fair Investment Opportunities for Professional Experts Act (H.R. 3394), which passed 397-12, points toward including:
| Likely Additions | Status |
|---|---|
| Licensed brokers registered with FINRA | Expected to qualify |
| Registered investment advisers | Expected to qualify |
| CFA (Chartered Financial Analyst) | Under consideration by SEC |
| CFP (Certified Financial Planner) | Under consideration by SEC |
| CPA (Certified Public Accountant) | Under consideration by SEC |
| Attorneys with securities practice | Under consideration by SEC |
| Finance degrees + work experience | SEC to establish criteria |
The SEC has 180 days after enactment to revise Regulation D with the specific qualifying credentials.
Why This Matters
The current wealth thresholds were set in 1982. A million dollars in net worth meant something very different 40+ years ago. Adjusted for inflation, that threshold would be over $3 million today.
Meanwhile, a financial analyst at a Fortune 500 company earning $150,000 per year might understand investment risks better than someone who inherited wealth but has no financial background. The INVEST Act recognizes that sophistication isn't the same as wealth.
Title III: A Faster Path to Going Public
For companies thinking about an IPO down the road, Title III removes several speed bumps.
What Is an Emerging Growth Company?
When the JOBS Act passed in 2012, it created a special category called "emerging growth companies" (EGCs). These are companies going public with less than about $1.2 billion in annual revenue. EGCs get certain accommodations that make the IPO process less burdensome.
The INVEST Act expands these benefits.
Reduced Financial History Requirements
Current rule: When filing to go public, companies must provide three years of audited financial statements.
INVEST Act: Reduces this to two years.
This matters more than it might seem. Audits are expensive. For a company that's only been operating for a few years, reconstructing and auditing a third year of financials can cost hundreds of thousands of dollars and delay the IPO timeline. Dropping to two years saves money and time.
The Act also changes the rules for acquired businesses. If you've made acquisitions, you currently might need to provide historical financials for those companies going back before your own audited history. The INVEST Act eliminates that requirement for EGCs.
Confidential Filing for Everyone
When you file to go public, that filing becomes public. Everyone can see your financials, your risk factors, and your business strategy. If the IPO falls through, that information is still out there.
The INVEST Act makes confidential draft submissions available to all companies, not just foreign issuers and EGCs. You can work through SEC comments and refine your disclosures privately. Only when you're confident the IPO will proceed do you make everything public.
This reduces the reputational risk of a failed IPO and lets companies be more candid during the review process.
Testing the Waters for All Issuers
"Testing the waters" means gauging investor interest before committing to a full IPO. Currently, this is mainly available to EGCs.
The INVEST Act extends this to all issuers. You can have preliminary conversations with potential investors to see if there's demand before spending millions on an IPO you're not sure will succeed.
Easier Access to Shelf Registrations
For public companies that want to raise additional capital quickly, "shelf registration" is valuable. It lets you pre-register securities and then sell them later without going through the full registration process each time.
Currently, to use the most flexible form of shelf registration (available to "well-known seasoned issuers" or WKSIs), your company needs a public float of at least $700 million.
INVEST Act change: Lowers this threshold to $400 million.
What this means: More mid-sized public companies can access capital markets quickly when opportunities arise, without the delays of a new registration process.
Summary of Title III Changes
| Area | Current Rule | INVEST Act |
|---|---|---|
| Audited financials for IPO | 3 years required | 2 years required |
| Confidential draft submissions | Limited to EGCs and foreign issuers | Available to all issuers |
| Testing the waters | Mainly EGCs | All issuers |
| WKSI public float threshold | $700 million | $400 million |
| Acquired company financials (EGCs) | May need pre-acquisition history | Limited to EGC's audited period |
The Context: Why Congress Is Acting Now
The House Financial Services Committee cited a troubling trend: the number of publicly traded companies in the U.S. has dropped from roughly 8,800 in 1997 to fewer than 4,000 in 2024. More than a 50% decline.
The Committee argues that compliance costs have made it harder for smaller companies to access public markets. The result: more companies stay private longer, and ordinary investors (who can only easily invest in public companies through their brokerage accounts) miss out on growth-stage returns.
The INVEST Act tries to address both sides of this: making it easier to raise private capital while also smoothing the path to eventually going public.
Not Everyone Agrees
The bill passed with bipartisan support, but not unanimously. The Congressional Progressive Caucus opposed it, particularly Section 206, which allows certain investment funds to hold more private investments while still being available to retail investors.
The concern: private investments are riskier, less liquid, and harder to evaluate than public stocks. Opening them up more broadly could expose unsophisticated investors to losses they don't fully understand.
Supporters counter that the bill routes retail access through professionally managed, SEC-regulated funds rather than direct private market exposure. Whether that's sufficient protection will be debated as the Senate considers the bill.
What Recent SEC Changes Mean
The INVEST Act doesn't exist in a vacuum. The SEC has already been making private fundraising easier in ways that compound the bill's impact.
In March 2025, the SEC issued guidance that simplifies how companies verify that investors are accredited. Previously, if you used general solicitation (publicly advertising your fundraise), you had to collect tax returns, bank statements, or third-party certifications from every investor.
The new guidance says that a minimum investment of $200,000 for individuals (or $1 million for entities), combined with a written representation that the investor is accredited, counts as "reasonable verification."
Translation: if someone is willing to write a $200,000 check, that's considered strong evidence they're accredited, without needing to see their tax returns.
Practical Takeaways
If you're raising a round in the next 12 months, start thinking about how the expanded accredited investor pool might affect your investor outreach. The exam pathway won't be available immediately, but professional licensure expansion could qualify more of your network than you realize.
Review your demo day materials. Make sure any pitch deck you've used at accelerator or university events stays within the safe harbor limits: what you're raising, the security type, the amount, and use of proceeds. Save the detailed term discussions for follow-up meetings.
For emerging fund managers, the expanded fund size limits ($50M cap, 500 investors) and higher allocation flexibility give you more room to grow without triggering Investment Company Act registration.
Update your subscription documents. Accredited investor representations in your investment agreements will need to accommodate the new pathways once the SEC finalizes rules. The current checkbox options won't cover exam-certified or expanded-professional-license investors.
If you're considering an IPO in the next few years, the reduced financial history requirements and confidential filing options are worth factoring into your timeline and budget.
Check your Form D compliance. The SEC has recently brought enforcement actions against companies that failed to file Form D within 15 days of their first sale. This isn't just paperwork. Fines ranged from $60,000 to $195,000 in recent cases.
Brief your board on the regulatory landscape. Whether or not the Senate passes the bill quickly, the direction is clear: Congress wants to expand capital access. Investors and board members will expect awareness of how these changes affect fundraising strategy.
What We're Watching
Senate Banking Committee timing. The Committee is currently focused on digital asset legislation. The INVEST Act will need floor time once that clears. The bipartisan House vote (302-123) suggests Senate passage is likely, but timing is uncertain.
SEC rulemaking on the accreditation exam. Once the bill passes, the SEC has one year to establish the exam. Watch for proposed rules on exam content, administration, and how long certification remains valid.
Professional credential decisions. The SEC will determine which additional licenses and certifications qualify. CFA, CFP, and CPA holders should watch for rulemaking announcements.
State blue sky coordination. Federal exemption expansion doesn't automatically override state registration requirements. Some states may need to update their rules to align.
The Path Forward
The INVEST Act represents Congress's clearest statement in years that capital formation rules need modernization. The bipartisan vote signals real momentum.
For founders, fund managers, and investors, the takeaway is straightforward: the rules are changing in ways that expand access to private capital. Understanding what's coming creates optionality.
The Senate will have its say. But the direction of travel is clear.