Could the INVEST Act Change How I Raise Money or Run My Fund?

You have been following news about changes to US fundraising rules.

Headlines suggest that venture funds may be able to grow larger, more investors could qualify as accredited investors, and startup fundraising might become easier.

If you manage a venture fund or regularly raise capital from angel investors, those changes sound significant. There is one important detail, however.

The INVEST Act of 2025 is not law.

Although the bill passed the US House of Representatives on December 11, 2025, it must still pass the Senate and be signed by the President before any of its proposed changes take effect.

Until then, founders and fund managers must continue following the current regulatory framework while monitoring future developments.

What Is the INVEST Act?

The Incentivizing New Ventures and Economic Strength Through Capital Formation Act (INVEST Act) is a bipartisan bill intended to expand access to private capital and simplify fundraising for startups and venture funds.

The legislation proposes several significant changes affecting venture capital funds, accredited investors, and startup fundraising activities.

However, none of these proposals are currently effective. The existing SEC rules continue to govern private offerings until the bill completes the legislative process.

Larger Qualifying Venture Capital Funds

One of the most important proposed changes affects qualifying venture capital funds.

The bill would increase:

• Maximum fund size: from $10 million to $50 million
• Maximum number of investors: from 250 to 500

For emerging fund managers, these higher limits could provide substantially greater flexibility before triggering additional regulatory requirements.

Larger qualifying funds may be able to attract more investors while continuing to rely on the existing exemption framework.

If enacted, this change could influence how first-time and emerging managers structure future funds.

A Broader Accredited Investor Definition

The INVEST Act also proposes expanding the accredited investor definition.

Rather than relying primarily on wealth-based qualifications, the bill would introduce additional ways for individuals to qualify. The proposal includes:

• Inflation-adjusted wealth thresholds
• Qualification based on professional licensure
• Qualification based on education or relevant experience
• An SEC-administered examination that would provide another path to accredited investor status

If these changes become law, a larger group of knowledgeable investors could participate in private offerings without meeting traditional wealth requirements.

Until then, current accredited investor rules remain fully applicable.

Demo Days Would Receive Additional Protection

Many founders worry that presenting their company at a university event or startup accelerator could be viewed as general solicitation.

The INVEST Act seeks to address that concern.

The bill clarifies that presentations at qualifying university and accelerator demo days would not be treated as general solicitation for securities law purposes.

This clarification could provide founders with greater confidence when participating in educational and entrepreneurial events while raising capital.

However, because the proposal has not yet become law, founders should continue following the existing SEC guidance.

Why the Bill’s Status Matters

Perhaps the most important point is procedural rather than substantive. The House approved the INVEST Act on December 11, 2025, by a bipartisan vote of 302-123.

Despite that progress, the legislation has not completed the legislative process.

It still requires:

• Approval by the US Senate
• Signature by the President before becoming law

Planning for possible future changes is reasonable. Changing fundraising practices before the law changes is not.

Until the bill is enacted, startups and fund managers should continue complying with today’s regulations.

How Founders and Fund Managers Can Prepare

Although no immediate action is required, businesses can begin evaluating how the proposed legislation might affect future fundraising.

For example, founders and fund managers may wish to review:

• Whether future funds could benefit from the proposed $50 million qualifying fund limit.
• Whether broader accredited investor eligibility could expand their potential investor base.
• Whether demo-day fundraising strategies would become more attractive if the legislation is enacted.
• Whether current fundraising documents and compliance procedures can be updated quickly if the law changes.

Preparing in advance allows companies to respond efficiently if the legislation ultimately becomes law.

Common Founder Mistakes

• Treating the INVEST Act as though it is already law: The bill has passed the House but still requires Senate approval and the President’s signature before any proposed changes become effective.
• Structuring a fundraising round based on the proposed accredited investor rules: Current SEC accredited investor requirements continue to apply until the legislation is enacted.
• Ignoring how the higher qualifying venture capital fund limits could affect future planning: Emerging fund managers should monitor the proposed increase from $10 million to $50 million and from 250 to 500 investors when evaluating future fund structures.
• Assuming demo-day presentations are automatically exempt from general solicitation rules: The proposed clarification has not yet taken effect, so founders should continue following the current regulatory framework.

10-Minute INVEST Act Self Check

• Am I relying only on fundraising rules that are currently in effect?
• If I manage a fund, would the proposed $50 million limit affect my next fund?
• Could broader accredited investor eligibility expand my future investor base?
• Do I regularly present at university or accelerator demo days?
• Have I reviewed my fundraising documents under today’s SEC rules?
• Do I have a plan to adjust quickly if the INVEST Act becomes law?

If any answer is unclear, confirm the current rules before your next raise or fund close.

Bottom Line

The INVEST Act proposes meaningful changes that could make fundraising more flexible for startups, investors, and emerging venture funds. Larger qualifying fund limits, broader accredited investor eligibility, and clearer demo-day guidance could all affect future capital formation. However, the legislation has not yet become law, so founders and fund managers should continue following the current regulatory framework while preparing for possible future changes.

Wondering How the INVEST Act Could Affect Your Next Fundraise?

Schedule a free 30-minute call with our team to discuss your concerns.

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