TLDR:
Key Points:
- The SEC has updated the dollar threshold for a vehicle to be considered a “qualifying venture fund” to $12 million, up from $10 million.
- Qualified venture funds are exempt from registering with the SEC as an investment company.
The Securities and Exchange Commission has updated the dollar threshold for a vehicle to be considered a “qualifying venture fund” to $12 million, up from $10 million. This change allows qualified venture funds to raise from up to 250 accredited investors while remaining exempt from registering with the SEC as an investment company. However, they still need to adhere to the major regulations of being a VC fund. Emerging funds, particularly those most likely to receive smaller checks from investors, have been significantly impacted by the VC bear market that began in 2022.
While the new SEC rule is a routine inflation adjustment that the SEC revisits every five years, it comes at a time when smaller VCs could genuinely benefit from such support. This change is crucial for smaller VCs struggling in the current market environment, needing to raise funds to continue their operations and investments.
