Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025

This section amends the Securities Exchange Act of 1934 to include 'rural-area small businesses' alongside women-owned small businesses in provisions related to expanding access to capital. This aims to ensure that the unique challenges faced by businesses in rural areas are specifically considered in capital formation initiatives and reporting by the SEC's Office of the Advocate for Small Business Capital Formation.

This section directs the SEC to revise Regulation D to exempt certain presentations or communications made at 'demo day' type events from the prohibition against general solicitation or general advertising. These events must be sponsored by specific types of entities (e.g., non-profits, angel investor groups, universities) and adhere to strict conditions, such as not advertising specific offerings, not charging excessive fees, and not making investment recommendations.

This section increases the maximum amount an issuer can raise through crowdfunding offerings from $100,000 to $250,000 within a 12-month period for certain investors. It also grants the SEC discretion to further increase this amount up to $400,000 based on recommendations from the Office of the Advocate for Small Business Capital Formation and the Office of the Investor Advocate. Technical corrections are also made to cross-references in the Securities Act of 1933.

This section amends the Investment Advisers Act of 1940 to increase the assets under management (AUM) threshold for certain investment advisers to qualify for an exemption from SEC registration from $150,000,000 to $175,000,000. It also mandates that the SEC adjust this dollar amount every 5 years to reflect changes in the Consumer Price Index for All Urban Consumers.

This section mandates the establishment of an 'Office of Small Business' within each of the SEC's Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets. These new offices are tasked with coordinating with the existing Office of the Advocate for Small Business Capital Formation on rules and policy priorities related to capital formation, without authorizing additional full-time equivalent employees.

This section requires the SEC to conduct studies (initially within 1 year, then every 5 years) on its definition of 'small entity' for purposes of the Regulatory Flexibility Act. The studies must consider alignment with the Act's findings, market growth, and how to appropriately define 'small entity' to expand coverage. Based on these studies, the SEC must submit reports to Congress with recommendations and then revise its rules. It also mandates inflation adjustments to any dollar figures in the small entity definition every 5 years.

This section amends the Securities Exchange Act of 1934 to exempt actions taken by the Advocate for Small Business Capital Formation from most requirements of the Paperwork Reduction Act (PRA). Specifically, it clarifies that the Advocate's information collection activities are not considered a 'collection of information' for PRA purposes, though certain transparency requirements (like public notice and comment) still apply, but without requiring OMB review or control numbers.

This section amends the Investment Company Act of 1940 to increase the number of beneficial owners a qualifying venture capital fund can have from 250 to 500 persons, and raises the asset threshold for certain venture capital funds from $10,000,000 to $50,000,000. It also mandates a study by the Advocate for Small Business Capital Formation and the Investor Advocate, 5 years after enactment, on the impact of these changes on capital distribution, socio-economic characteristics of founders, and veteran status. Based on the study's findings, the SEC may adjust these thresholds further within specified ranges.

This section directs the SEC to revise the definition of a 'qualifying investment' for venture capital funds to include equity securities acquired in secondary acquisitions and investments in other venture capital funds. It also imposes a new condition for a private fund to qualify as a venture capital fund: immediately after acquiring any asset, the fund must hold no more than 49 percent of its aggregate capital contributions and uncalled committed capital in a combination of other venture capital funds or qualifying investments acquired in secondary acquisitions.

This section amends the definition of 'accredited investor' under the Securities Act of 1933. It retains the existing net worth and income thresholds (with inflation adjustments every 5 years) but clarifies how primary residence is treated in net worth calculations. Crucially, it adds new categories: natural persons licensed as brokers or investment advisers in good standing, and natural persons the SEC determines, by regulation, to have demonstrable education or job experience verified by a self-regulatory organization.

This section significantly amends the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934 to expand exemptions for certain retirement plans, particularly those under Section 403(b) of the Internal Revenue Code. It clarifies that collective trust funds and separate accounts holding assets of these plans, including those for charities and educational institutions, can be excluded from the definition of an investment company, provided certain fiduciary review and approval conditions are met for investment alternatives.

This section mandates the SEC to establish an examination (test, certification, or program) to certify individuals as 'accredited investors.' The examination must be designed to assess competency in various financial topics, including types of securities, disclosure requirements, corporate governance, financial statements, and risks associated with unregistered securities and private funds. This examination will be administered free of charge by a registered national securities association.

This section establishes a Senior Investor Taskforce within the SEC, reporting directly to the Chairman, to identify challenges faced by senior investors, including financial exploitation and cognitive decline. The Taskforce will coordinate with other offices and agencies, and issue biennial reports to Congress with recommendations. It also mandates a GAO study on the economic costs, frequency, and policy responses to financial exploitation of senior citizens. The Taskforce will sunset after 10 years and use existing funds.

This section directs the SEC to propose and finalize rules within one year to allow covered entities (investment companies, brokers, advisers, etc.) to satisfy regulatory document delivery obligations using electronic means. The rules must include provisions for initial paper communications, a transition period, annual opt-out notices, failed delivery remediation, and readability/retainability standards. If the SEC fails to act, covered entities can proceed with electronic delivery under specified conditions. It also exempts electronic delivery under this section from certain requirements of the Electronic Signatures in Global and National Commerce Act.

This section amends the Investment Company Act of 1940 to explicitly state that the SEC may not prohibit or limit a closed-end company (including business development companies) from investing any or all of its assets in securities issued by private funds. It also restricts the SEC and national securities exchanges from imposing conditions on the offer, sale, or listing of such closed-end companies' securities, unless the conditions are unrelated to the private fund investments themselves. It includes rules of construction to clarify that fiduciary duties and existing valuation/liquidity requirements for closed-end companies are not limited.

This section amends the Securities Exchange Act of 1934 to allow *any* issuer (not just emerging growth companies) to confidentially submit a draft registration statement to the SEC for nonpublic review prior to public filing. The initial confidential submission and all amendments must be publicly filed at least 10 days before listing on a national securities exchange. It also clarifies that information provided under this provision is confidential and exempt from public disclosure under FOIA.

This section allows registered investment companies to omit fees and expenses incurred indirectly from investing in business development companies (BDCs) when calculating 'Acquired Fund Fees and Expenses' in their fee table disclosures. This applies to various SEC forms (N-1A, N-2, N-3) used by different types of investment companies.

This section expands the 'testing the waters' provision (allowing pre-filing communications with qualified institutional buyers and accredited investors) from only emerging growth companies (EGCs) to *all* issuers. It also broadens the confidential review of draft registration statements to all issuers for initial public offerings, initial registrations, and follow-on offerings, with specific public filing deadlines before effectiveness or listing. The SEC may impose additional terms and conditions through rulemaking, but must report findings to Congress first.

This section amends the Securities Act of 1933 and the Securities Exchange Act of 1934 to clarify that an emerging growth company (EGC) is not required to present acquired company financial statements or information for any period prior to the earliest audited period of the EGC presented in connection with its initial public offering (IPO). This relief also applies to former EGCs for periods prior to their IPO's earliest audited period, reducing the burden of historical financial reporting for acquired entities.

This section mandates the Comptroller General of the United States, in consultation with the SEC and FINRA, to conduct a study on the costs associated with small- and medium-sized companies undertaking initial public offerings (IPOs). The study must analyze direct and indirect costs (e.g., fees, compliance), compare IPO costs to alternative financing, assess impact on capital formation and retail investor access, and analyze IPO trends over time, including underwriting practices, investment research, and litigation costs. A report with findings and recommendations is due to Congress within 360 days.

This section expands the definition of a 'well-known seasoned issuer' (WKSI) for federal securities laws. An issuer now qualifies as a WKSI if the aggregate market value of its voting and non-voting common equity held by non-affiliates is $400,000,000 or more (down from $700,000,000), provided it meets all other WKSI requirements. It also requires the SEC to publish the number of withdrawn applications for WKSI status where the applicant sought a determination not to be considered an ineligible issuer.

This section amends the Securities Exchange Act of 1934 to require the SEC to promulgate rules mandating enhanced disclosures for issuers with multi-class share structures. In proxy or consent solicitation materials for annual meetings (or other appropriate filings), these issuers must disclose, for each director, director nominee, named executive officer, or 5%+ beneficial owner, the number of shares and total voting power held, expressed as a percentage of total outstanding voting securities.