HR3383-119

What This Bill Does

The INVEST Act is a multi-title capital-formation package. Early sections add rural-area small businesses to the SEC Advocate for Small Business Capital Formation's priorities and require the SEC to revise Regulation D so presentations at qualifying events sponsored by governments, universities, nonprofits, angel investor groups, incubators, accelerators, venture forums, and trade associations are not treated as prohibited general solicitation when strict conditions are met. It raises crowdfunding investment caps from $100,000 to $250,000 and lets the SEC raise them up to $400,000 on recommendations from the Small Business Advocate and Investor Advocate. It raises the exempt-reporting-adviser threshold for certain private-fund advisers from $150 million to $175 million with five-year inflation adjustments. It requires Offices of Small Business inside the SEC Divisions of Corporation Finance, Investment Management, and Trading and Markets without additional FTE authority. It requires periodic SEC studies and recommendations on small-entity definitions. Later provisions ease information collection by the Small Business Advocate, expand qualifying venture capital fund thresholds, set a study-and-rulemaking process for those thresholds, direct electronic delivery rules for regulatory documents, allow closed-end companies and business development companies to invest in private funds, expand confidential IPO and exchange-listing draft-review tools, relax some acquired-company financial-statement requirements for emerging growth companies, require multi-class share voting-power disclosure, require an IPO-cost study, expand well-known seasoned issuer eligibility to certain $400 million issuers, and establish a venture-exchange framework.

Who Benefits and How

Rural small businesses, early-stage startups, angel investor groups, incubators, accelerators, crowdfunding issuers, crowdfunding platforms, small venture-capital fund advisers, qualifying venture capital funds, closed-end funds, business development companies, emerging growth companies, mid-cap public companies, companies planning IPOs, companies pursuing exchange listings, venture exchanges, small-cap companies, SEC small-business advocates, and retail investors seeking access to private-fund exposure benefit because the bill loosens communication limits, raises fundraising or adviser thresholds, creates small-business SEC offices, allows more private-fund exposure through listed vehicles, expands confidential offering review, and creates new market venues for smaller issuers.

Who Bears the Burden and How

The Securities and Exchange Commission, SEC Corporation Finance staff, SEC Investment Management staff, SEC Trading and Markets staff, SEC rulemaking offices, Office of the Advocate for Small Business Capital Formation, Office of the Investor Advocate, broker-dealers, registered investment advisers, investment companies, closed-end fund boards, venture-exchange operators, accounting firms, underwriters, multi-class-share issuers, investor-protection advocates, and retail investors exposed to private-fund or less-seasoned issuer risk bear burdens because the bill requires rule revisions, studies, reports, small-office coordination, electronic-delivery rules, new disclosure frameworks, threshold adjustments, exchange applications, and acceptance of looser solicitation or private-fund access safeguards.

Key Provisions

• Expands SEC small-business advocacy to include rural-area small businesses.
• Requires Regulation D demo-day and angel-event communication relief for qualifying issuers and event sponsors.
• Raises crowdfunding investment caps to $250,000 and allows later increases up to $400,000.
• Raises the exempt-reporting-adviser threshold for certain private-fund advisers to $175 million with inflation adjustments.
• Establishes Offices of Small Business in major SEC divisions without authorizing additional full-time employees.
• Requires small-entity definition studies, small-business advocate information-gathering relief, and venture-capital threshold updates.
• Provides electronic-delivery rulemaking, closed-end-fund private-fund investment authority, and expanded confidential registration-review tools.
• Requires multi-class share disclosures, IPO-cost studies, WKSI eligibility expansion, and a venture-exchange framework.