Summary

The Incentivizing New Ventures and Economic Strength Through Capital Formation Act, commonly known as the INVEST Act, is a bipartisan legislative package passed by the U.S. House of Representatives in 2025 aimed at simplifying investment standards and expanding access to capital for startups, small businesses, and emerging growth companies. The Act responds to the long-term decline in the number of U.S. public companies—from approximately 8,800 in 1997 to fewer than 4,000 by 2024—which has limited investment opportunities for retirement savers and constrained economic growth and innovation. By cutting regulatory red tape and modernizing compliance requirements, the INVEST Act seeks to revitalize the U.S. public markets and stimulate job creation and long-term competitiveness.
Key provisions of the INVEST Act include broadening the Securities and Exchange Commission’s (SEC) definition of “accredited investor” to incorporate individuals with professional licenses, relevant financial education, or who pass a certification exam, thereby democratizing access to investment opportunities traditionally limited to a narrow class of investors. The legislation also expands the eligibility of 403(b) retirement plans to invest in collective investment trusts similar to 401(k) plans and eases fundraising rules for startups by raising thresholds for crowdfunding and reducing compliance costs. Furthermore, the Act enhances transparency by mandating clearer disclosures on multi-class share structures and directs studies to assess costs associated with initial public offerings (IPOs), aiming to make going public more accessible and affordable for smaller companies.
The Act consolidates over 20 individual bipartisan measures and directs the SEC to establish new offices focused on supporting small businesses, including rural job creators, signaling a commitment to equitable economic growth across diverse regions. It also strengthens investor protections by enhancing disclosure requirements, reinforcing fiduciary standards for financial advisors, and establishing robust whistleblower protections through the SEC’s Investor Protection Fund. While promoting voluntary compliance flexibility for registered open-end companies, the Act balances deregulation with safeguarding market integrity.
Despite broad bipartisan support in the House, where it passed 302–123, the INVEST Act has faced criticism from some lawmakers concerned about potential risks to investor protections and the effects of loosening regulatory standards. The Senate’s consideration remains a critical step before the bill can become law. Nevertheless, the INVEST Act is widely regarded as a major effort to reignite capital formation in the United States by simplifying regulatory frameworks, expanding investor inclusivity, and supporting small business growth.

Background

Capital formation plays a critical role in driving American economic growth and prosperity, impacting everything from startups and small businesses to large public companies. However, the number of U.S. public companies has drastically declined over the past few decades, falling from approximately 8,800 in 1997 to fewer than 4,000 by 2024. This significant reduction has resulted in fewer investment opportunities for retirement savers and has constrained job creation and innovation in the economy.
In response to these challenges, Congress has a long history of enacting legislation aimed at regulating and fostering investment activity. Notably, the Investment Advisers Act of 1940 and the Investment Company Act of 1940 established the regulatory framework governing investment advisers and investment companies. These acts defined responsibilities, imposed fiduciary standards on investment advisers, and regulated publicly traded investment products such as mutual funds and unit investment trusts. These regulatory structures have evolved over time to address complex issues including corporate governance, securities regulation, mergers and acquisitions, and systemic risks.
Recent developments in regulatory policy continue to emphasize the need to modernize and simplify compliance requirements, particularly for small businesses and emerging growth companies. Efforts include reducing audited financial statement requirements for emerging growth companies and amending money market fund regulations to restore flexibility in portfolio valuation methods. These measures aim to facilitate capital formation and enhance the ability of investors and companies to navigate the financial markets effectively.
Against this backdrop, the INVEST Act was introduced to cut regulatory red tape and streamline investment standards, thereby expanding access to capital for startups and small businesses. By simplifying compliance and reducing barriers to going public, the Act seeks to reverse the decline in public market participation and invigorate economic competitiveness, job creation, and long-term investment opportunities across the United States.

Overview of the INVEST Act

The INVEST Act, formally known as the Incentivizing New Ventures and Economic Strength Through Capital Formation Act, is a comprehensive bipartisan legislative package designed to simplify investment standards, expand access to capital for small businesses and startups, and revitalize the U.S. public markets. Introduced by key members of the House Financial Services Committee—including Chair French Hill (R-Arkansas), Capital Markets Subcommittee Chair Ann Wagner (R-Missouri), Representative Gregory Meeks (D-New York), and Representative Josh Gottheimer (D-New Jersey)—the bill consolidates over 20 individual bipartisan measures, all aimed at strengthening capital formation and increasing investment opportunities.
A primary focus of the INVEST Act is to foster small business and startup growth. It directs the Securities and Exchange Commission (SEC) to enhance support for small businesses by broadening the Office of the Advocate for Small Business Capital Formation to include rural job creators and establishing new Offices of Small Business within key SEC divisions such as Corporation Finance, Investment Management, and Trading & Markets. The Act also mandates regular reporting on rural small business challenges and calls for updates to the definition of “small entity,” ensuring that regulatory rules explicitly consider small-business impacts.
To increase inclusivity in investing, the Act expands the SEC’s definition of “accredited investor” by adding individuals who hold professional brokerage or investment adviser licenses, those with qualifying financial education or relevant job experience, and individuals who pass a newly created certification exam. This change aims to democratize access to investment opportunities traditionally reserved for a narrow class of investors.
Another significant provision permits 403(b) retirement plans to invest in the same collective investment trusts as 401(k) plans, thereby broadening investment options for employees with 403(b) plans. This inclusion reflects efforts to modernize retirement plan investment options and provide greater flexibility.
The INVEST Act also incorporates provisions from the earlier Increasing Investor Opportunities Act, which removes restrictions on closed-end funds investing in private investment funds. This expansion of investment opportunities is supported by industry stakeholders such as TIAA, which highlighted the bill’s potential to enhance transparency, safeguard senior investors, and reduce initial public offering costs for smaller firms.
Additionally, the Act addresses regulatory flexibility and compliance costs by easing fundraising rules for startups and allowing certain voluntary measures related to asset valuation and shareholder transaction fees for open-end investment companies. These changes aim to make capital formation more accessible and efficient without compromising investor protections.
In sum, the INVEST Act represents a major effort to restore the vitality of U.S. public markets by increasing the number of public companies, expanding investment opportunities, and supporting small business growth nationwide. The full House of Representatives was expected to consider the legislation following its unanimous progression out of committee, signaling strong bipartisan support for its comprehensive reforms.

Key Provisions

The INVEST Act is a comprehensive legislative package aimed at simplifying investment standards, expanding capital access for small businesses, and promoting market growth through a variety of targeted reforms. The bill consolidates more than 20 bipartisan measures that have advanced through committee and addresses key areas including small business growth, investor inclusivity, and public company transparency.

Small Business and Startup Growth

A central focus of the INVEST Act is to support small businesses and startups by easing regulatory burdens that have historically discouraged early-stage fundraising and Initial Public Offerings (IPOs). The legislation directs the Securities and Exchange Commission (SEC) to broaden its Office of the Advocate for Small Business Capital Formation to include rural-area job creators and establish new Offices of Small Business within key SEC divisions such as Corporation Finance, Investment Management, and Trading & Markets. These new offices are tasked with coordinating efforts to address small business challenges, including conducting studies and rulemakings to update the definition of “small entity” with attention to small-business impacts.
Additionally, the Act raises thresholds to facilitate crowdfunding and reduce compliance costs for startups. It increases the threshold that triggers costly accountant involvement in early-stage fundraising and makes it easier for startups to access capital beyond traditional coastal hubs. The Act builds on reforms introduced by the JOBS Act by further easing the path for small companies to go public and expand investor opportunities.

Expanding Investor Access and Inclusivity

To make investment opportunities more inclusive, the INVEST Act broadens the SEC’s definition of “accredited investor.” The expanded definition now includes individuals holding professional brokerage or investment adviser licenses, those with qualifying financial education or relevant job experience, and individuals who pass a newly created certification exam. The SEC is required to establish this certification exam within one year of the bill’s enactment.
The Act also doubles the investor cap for qualifying venture capital funds from 250 to 500 investors and raises their capital limit from $10 million to $50 million, thereby allowing more investors to participate in such funds. Furthermore, it enables electronic delivery of investor documents and expands access to private funds for retail investors, reflecting the fact that over half of American households have some exposure to the stock market through retirement plans and mutual funds.
The bill includes provisions such as bringing collective investment trusts (CITs) to 403(b) retirement plans by addressing gaps in federal securities law that previously prevented their inclusion despite tax law changes made under the SECURE 2.0 Act of 2022.

Enhancing Public Company Growth and Transparency

The INVEST Act seeks to facilitate public company growth by simplifying IPO processes and reducing disclosure burdens, especially for small and midsize firms. It lowers the market value threshold for companies to be considered “well-known seasoned issuers” from $700 million to $400 million, making it easier for more companies to benefit from streamlined registration processes.
Transparency is further improved through mandated clearer disclosures on multi-class share structures, providing investors with better information about governance and control mechanisms. The legislation also directs the Government Accountability Office (GAO) to conduct a study on IPO costs for smaller firms, aiming to identify additional barriers and inform future reforms.

Supporting Mid-Sized and Small Businesses through Business Development Companies

Included in the broader INVEST Act package is the Access to Small Business Investor Capital Act, which addresses a 2006 SEC rule that inadvertently discouraged investment in business development companies (BDCs) due to misleading fee disclosures. This legislation seeks to correct these issues to make it easier for BDCs to grow and, in turn, support mid-sized and small businesses by expanding their access to capital.

Facilitating Investment in Private Funds by Closed-End Funds

The bill also contains provisions such as the Increasing Investor Opportunities Act, which permits closed-end funds to increase investments in private investment funds without SEC-imposed limitations on sales or listings of securities related to those funds. This change aims to broaden investor opportunities and improve capital formation efficiency.

Legislative Process

The Incentivizing New Ventures and Economic Strength Through Capital Formation Act, commonly known as the INVEST Act, underwent a comprehensive legislative process in the House of Representatives before moving to the Senate. The bill, which consolidates more than 20 bipartisan measures aimed at strengthening capital markets, was introduced with leadership from House Financial Services Committee Chair French Hill (R-Arkansas), Capital Markets Subcommittee Chair Ann Wagner (R-Missouri), and Representatives Gregory Meeks (D-New York) and Josh Gottheimer (D-New Jersey).
On December 9, 2025, the House Rules Committee reported a structured rule for the consideration of the bill, waiving all points of order against it and providing for one hour of general debate equally divided and controlled by the chair and ranking minority member of the Committee on Financial Services or their respective designees. The rule also allowed the bill to be considered as read and waived all points of order against its provisions.
The House of Representatives passed the INVEST Act with a significant bipartisan vote of 302-123. All Republicans present supported the legislation, along with 87 Democrats, while 123 Democrats voted against it. The bill includes provisions that broadly ease regulatory requirements and thresholds for capital raises, including crowdfunding. Additionally, it folds in previously approved bills such as the Retirement Fairness for Charities and Educational Institutions Act, which aligns collective investment trusts (CITs) and certain insurance separate accounts in 403(b) plans more closely with 401(k) treatment.
Following its passage in the House, the bill was sent to the Senate where it was read twice and referred to the Committee on Finance for further consideration. The Senate’s handling of the bill was anticipated to be a crucial step toward its enactment, with expectations that if passed without amendment, the legislation would proceed to the President for signature into law. Throughout the process, members were advised to consult with the Office of Legislative Counsel, the Office of the Parliamentarian, and the Committee on the Budget to ensure compliance with House rules and the Congressional Budget Act regarding any amendments.

Economic and Market Impact

The INVEST Act is poised to significantly influence the economic landscape by expanding access to capital for small businesses and startups, thereby fostering job creation, innovation, and long-term competitiveness. One of the pressing issues the Act addresses is the sharp decline in the number of U.S. public companies, which has dropped from approximately 8,800 in 1997 to fewer than 4,000 as of 2024. This decline has reduced investment opportunities for retirement savers and limited capital formation options for emerging firms. By cutting regulatory red tape and simplifying the process for startups to raise funds, the INVEST Act aims to reverse this trend and revitalize the U.S. public markets.
A key economic benefit of the legislation is its targeted support for entrepreneurs outside traditional coastal hubs and first-time founders, who often face disproportionate hurdles in fundraising. The Act eases compliance requirements and clarifies rules around early-stage fundraising, including raising thresholds for investment crowdfunding and expanding permissible fund sizes from $10 million to $50 million, which collectively lower barriers for startup capital formation. Additionally, the Act clarifies that company presentations at sponsored events do not constitute “general solicitation,” allowing founders to pitch more freely without inadvertently violating securities laws.
The Act also introduces structural reforms aimed at simplifying the initial public offering (IPO) process. It lowers the market value threshold for companies to be considered “well-known seasoned issuers” from $700 million to $400 million, reduces disclosure burdens, and mandates clearer transparency on multi-class share structures to enhance investor confidence. These changes are expected to make public offerings more accessible and affordable for small and midsize firms, encouraging more companies to go public and improving capital flow into the economy.
Beyond individual companies, the INVEST Act directs the Securities and Exchange Commission (SEC) to broaden its Office of the Advocate for Small Business Capital Formation to better support rural job creators and establish new small business offices within key SEC divisions. This institutional support underscores the Act’s commitment to equitable economic growth across diverse geographic regions.

Regulatory and Compliance Implications

The INVEST Act introduces significant regulatory and compliance changes aimed at simplifying investment standards while maintaining investor protections. A key feature of the Act is its encouragement of voluntary compliance among registered open-end companies. These entities are granted flexibility to implement measures related to asset value adjustments and shareholder transaction fees, fostering adaptability within the regulatory framework without compromising oversight.
In addition to these provisions, the Act reinforces the necessity for full and fair disclosure of material facts to clients, ensuring transparency and promoting fiduciary loyalty. Financial advisors are required to meet specific criteria based on the type of advice they provide, their method of compensation, and their primary source of income. Regulatory oversight is structured according to the scale of advisor operations, with the Securities and Exchange Commission (SEC) or state securities regulators assuming responsibility accordingly.
These regulatory updates continue a long-standing tradition of financial oversight in the United States, rooted in historical responses such as the Investment Advisers Act of 1940, which was enacted following the stock market crash of 1929 and the Great Depression. The INVEST Act builds upon this legacy by streamlining compliance requirements while upholding standards that protect investors and maintain market integrity.

Investor Protection and Transparency

The INVEST Act introduces comprehensive measures aimed at enhancing investor protection and promoting greater transparency within the financial markets. A key component of the legislation is the requirement for full and fair disclosure of material facts to clients, which ensures transparency and loyalty on the part of financial advisors. These advisors must meet specific criteria based on the type of advice they provide, their compensation methods, and their primary sources of income. Oversight responsibilities are divided between the Securities and Exchange Commission (SEC) and state securities regulators, depending on the scale of the advisors’ operations, reflecting historical regulatory responses inspired

Reception and Analysis

The INVEST Act has garnered significant attention and analysis from various stakeholders within the financial and legislative communities. Industry experts emphasize the comprehensive and bipartisan nature of the legislation, which consolidates over 20 individual bills aimed at strengthening capital markets and enhancing investor opportunities. The House of Representatives approved the package with a substantial majority vote of 302 to 123, reflecting broad support for its provisions.
Analysts highlight that the Act could lead to a notable influx of capital into private markets by simplifying investment standards and expanding access to different types of investment vehicles. For example, the Increasing Investor Opportunities Act, a key component of the INVEST Act, enables closed-end funds to increase their investment in private funds while restricting the Securities and Exchange Commission from limiting the sale or listing of such securities. This change is seen as a mechanism to stimulate greater market participation and liquidity.
Legislative and market perception analyses indicate that the Act’s passage is expected to influence C-suite strategic discussions and investor relations activities. By streamlining regulatory frameworks and promoting investor engagement, corporate issuers can better align their communications and investment stories with market expectations. Perception analytics tools integrated into this process help companies gather actionable feedback from investors and analysts, shaping how the market perceives their corporate messaging and long-term strategy.
Furthermore, legislative experts note the thorough committee vetting and procedural adherence that preceded the Act’s advancement. The bill was reported out of committee by a record vote of 9-3, with structured rules set for its consideration, indicating strong procedural support and bipartisan collaboration. This foundation has contributed to positive reception among lawmakers and advocacy groups, who anticipate the legislation will foster fairer and more efficient capital formation.

Implementation and Future Outlook

The implementation of the INVEST Act marks a pivotal moment in the evolution of U.S. capital markets, aiming to simplify investment standards and foster economic growth. As the Act amends existing regulatory frameworks, such as the Investment Company Act of 1940, it introduces greater flexibility for registered open-end companies by allowing voluntary measures related to asset value adjustments and shareholder transaction fees. Notably, it codifies the use of the amortized cost method for portfolio valuation, enabling all investors, including those utilizing prime and municipal money market funds, to benefit from stable share pricing for cash management purposes.
The Act’s emphasis on encouraging voluntary compliance underscores a balanced approach to regulation, blending necessary oversight with operational flexibility. This approach is expected to restore confidence and participation in money market funds, which are critical vehicles for short-term investment and liquidity management. Moreover, the Act addresses systemic issues in capital formation by streamlining regulatory requirements that have historically impeded the growth and accessibility of public markets.
Looking forward, the INVEST Act is anticipated to revitalize capital formation, a cornerstone of American economic growth and innovation. The decline in the number of U.S. public companies—from 8,800 in 1997 to fewer than 4,000 in 2024—has raised concerns about reduced investment opportunities and retirement security for Americans. By simplifying investment standards and enhancing market efficiency, the Act aims to reverse this trend, thereby supporting job creation, innovation, and long-term competitiveness across sectors.
Additionally, ongoing perception analytics will play a vital role in the Act’s successful implementation by helping corporate issuers gauge investor and analyst sentiment. These insights will allow companies to refine their communication strategies, align management goals with market expectations, and differentiate their investment narratives effectively. Such tools will facilitate more informed decision-making at the executive level, ultimately contributing to a more transparent and responsive capital market environment.
In sum, the INVEST Act’s regulatory adjustments, coupled with enhanced market intelligence practices, position it as a transformative policy designed to ignite market capital and strengthen the foundation of the U.S. financial system for years to come.