The INVEST Act: What Fund Managers Need to Know About the Biggest Capital Formation Bill in a Decade
A Landmark Capital Formation Bill Heads to the Senate
In December 2025, the U.S. House of Representatives passed the Incentivizing New Ventures and Economic Strength Through Capital Formation Act — better known as the INVEST Act — with a bipartisan vote of 302 to 123. This capital formation bill is now before the Senate, and if it becomes law, it could represent the most significant set of changes to private fund regulation since the JOBS Act of 2012.
For fund managers, especially those running smaller or emerging funds, several provisions of this SEC regulatory reform deserve close attention.
Modernizing the Accredited Investor Definition
First, the INVEST Act proposes to modernize the accredited investor definition for the first time since 1982. Currently, individuals must meet specific income or net worth thresholds to qualify — $200,000 in annual income (or $300,000 jointly) or a net worth exceeding $1 million, excluding a primary residence. The INVEST Act would adjust these thresholds for inflation and, more importantly, create new qualification pathways based on professional licensure, education, or experience. It would even direct the SEC to establish a free accredited investor exam that, once passed, would qualify an individual regardless of their financial standing.
Why does this matter for capital formation? A broader accredited investor base means a larger pool of potential limited partners for your fund. If you’re raising under Rule 506© and marketing publicly, having more people qualify as accredited investors directly increases your addressable market.
Higher Registration Thresholds for Emerging Managers
Second, the bill would raise the investment adviser registration threshold from $150 million to $175 million in assets under management. For emerging managers who aren’t ready to bear the full cost of SEC registration, this gives a bit more room to grow before triggering that obligation.
Expanding Venture Capital Fund Limits
Third, the INVEST Act would expand the qualifying venture capital fund size from $10 million to $50 million while raising the investor cap from 250 to 500. While this provision is targeted at VC funds specifically, it signals a broader legislative intent to make it easier for smaller fund managers to operate with less regulatory overhead.
Clarifying General Solicitation Rules at Demo Days
The bill also proposes to clarify general solicitation rules by specifying that presentations at sponsored events — such as university pitch days, accelerator demo days, and angel investor group meetings — would not be treated as general solicitation under Regulation D. For fund managers who attend these events to network and source potential investors, this removes a significant legal gray area.
What Happens Next with the INVEST Act?
It’s worth noting that the INVEST Act has not yet passed the Senate, and its timeline for a vote remains unclear. The bill could be amended, delayed, or folded into a larger legislative package. But the strong bipartisan support it received in the House suggests that at minimum, these themes — broadening private market access, reducing compliance burdens for smaller issuers, and modernizing decades-old thresholds — have real political momentum.
We’ll continue monitoring this legislation closely and will update you on any developments. In the meantime, if you’re planning a capital raise, it’s worth discussing with your legal counsel how potential changes to the accredited investor definition could affect your strategy.
Regulatory changes like the INVEST Act can open new doors for your fund — but only if you’re positioned to take advantage of them. GAML-E helps fund managers stay ahead of regulatory shifts, structure their operations for compliance, and build investor-ready infrastructure on Avestor.
