The INVEST Act: What the House-Passed Capital Formation Bill Could Change for Private Investors

TL;DR: The Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025 (H.R. 3383), known as the INVEST Act, passed the House 302-123 on December 11, 2025. Eighty-seven Democrats joined all present Republicans to send it to the Senate. It has sat in the Senate Banking Committee ever since. No floor vote is scheduled. The bill would create an exam-based pathway to accredited investor status, raise the VC fund beneficial-owner cap from 250 to 500, and codify safe harbors for angel group demo days. Whether any of that happens is a different question.

What the INVEST Act Actually Changes

The bill bundles more than 22 individual pieces of legislation into three titles. Title I covers public-market reforms. Title II covers private-market access and investor definitions. Title III addresses retirement vehicles. Most of what matters to private investors lives in Title II.

Here are the eight provisions that deserve your attention.

Provision	What It Changes	Current Law
Accredited Investor Exam (Section 203)	Directs the SEC to create a free, publicly available knowledge exam within one year of enactment. Anyone who passes qualifies as an accredited investor regardless of net worth or income. Topics include securities types, private fund risks, financial statements, and conflicts of interest.	Accredited investor status requires $1 million net worth (excluding primary residence) or $200,000 annual income ($300,000 joint). The 2020 SEC amendments added Series 7, Series 65, and Series 82 license holders, but no standalone exam pathway exists.
Threshold Inflation Indexing (Section 201)	Requires mandatory adjustment of the $1M net worth and $200K income thresholds every five years, tied to inflation. Also adds criteria based on professional licensure, education, or experience.	The $1M/$200K thresholds have not been updated since 1982. No automatic inflation adjustment exists.
ICAN Act: VC Fund Caps (Section 108)	Raises the beneficial-owner cap for qualifying venture capital funds under Section 3(c)(1) of the Investment Company Act from 250 to 500 persons. Raises the dollar cap from approximately $12 million to $50 million. Both thresholds are indexed for inflation every five years.	Section 3(c)(1) funds are capped at 250 beneficial owners. The dollar limit is approximately $12 million. Funds that exceed either threshold must register as investment companies under the 1940 Act.
DEAL Act: Fund-of-Funds (Section 109)	Directs the SEC to broaden the definition of "qualifying investment" under Rule 203(l)-1 to include secondary transactions and investments in other VC funds. Such investments cannot exceed 49% of aggregate capital contributions plus uncalled committed capital.	Under current Rule 203(l)-1, investments in other funds and secondary positions are capped at 20% of capital contributions plus uncalled capital. Pure VC funds-of-funds remain ineligible for the VC adviser exemption.
HALOS Act: Demo Day Safe Harbor (Section 102)	Codifies SEC Rule 148 into statute. Presentations at angel group meetings, incubators, accelerators, universities, and government-sponsored events do not count as "general solicitation" under Regulation D. Strict conditions apply: no investment recommendations, no attendance fees, disclosures capped to one page, and offering details limited to security type, amount, and use of proceeds.	Rule 148 exists as an SEC rule, not a statute. Legal ambiguity has persisted about which presentations trigger general solicitation rules under Rule 506(b), which bans general solicitation and restricts issuers to pre-existing relationships.
Private Fund Adviser Threshold (Section 104)	Raises the AUM exemption threshold for private fund advisers under the Investment Advisers Act from $150 million to $175 million. Indexed for inflation every five years, rounded to the nearest $1 million. Advisers that exceed the new threshold must fully register with the SEC.	The Exempt Reporting Adviser threshold is $150 million in private fund AUM, set by Dodd-Frank in 2010 and never updated for inflation.
Closed-End Fund Access (Section 206)	Removes SEC authority to restrict closed-end funds from investing in private funds. Prohibits exchanges from barring closed-end funds that invest in private funds from trading.	The SEC has applied an informal 15% cap on closed-end fund investments in private funds since 2002. This rule is not codified but has limited retail investor access to private markets through regulated fund vehicles.
Reg CF Accountant Review (Section 103)	Raises the accountant-review threshold for Regulation CF offerings from $100,000 to $250,000. Gives the SEC discretion to raise it further to $400,000.	Issuers raising more than $100,000 under Reg CF must have financial statements reviewed by an independent accountant. The audited financial statement threshold (approximately $1.235 million) does not change.

Who Supports It and Who Opposes It

Support is broad and organized. The National Venture Capital Association (NVCA) endorsed the bill immediately after House passage. NVCA President and CEO Bobby Franklin said the bill would "unlock early-stage capital in regions that too often face persistent funding gaps" and reduce "regulatory friction that prevents more venture-backed companies from going public." The Angel Capital Association (ACA) and Accredited Investor Alliance (AIA) led a coalition of more than 20 organizations in letters to Speaker Johnson and House Financial Services Committee Chairman French Hill backing H.R. 3383. ACA CEO Patrick Gouhin called angel investors "the first believers in so many of America's most promising young companies."

The Investment Company Institute submitted a formal comment letter to House leadership. The Small Business Investor Alliance (SBIA) backs the bill, particularly the adviser threshold provision. SBIA President Brett Palmer called it "a smart and necessary modernization of outdated regulation." SEC Chair Paul Atkins gave an explicit public endorsement at a U.S. Chamber of Commerce event on February 23, 2026. His words were direct: "A knowledge-based exam would recognize that financial sophistication can scarcely be tied only to wealth."

The main organized opposition comes from the North American Securities Administrators Association (NASAA), which represents state securities regulators. NASAA issued a formal letter calling for a "no" vote on December 10, 2025, the day before the House floor vote. NASAA's core argument is that the bill "would boost the private markets while making investments unsuitable for retail investors more accessible" without pairing that access with stronger Form D disclosure requirements. NASAA also objected to the standalone exam pathway, arguing that an exam without practical experience requirements does not adequately protect investors. HFSC Ranking Member Maxine Waters (D-CA) did not back the bill, which is notable because she co-sponsored the 2018 JOBS Act 3.0.

The Senate Problem

H.R. 3383 reached the Senate on December 15, 2025. The Senate Committee on Banking, Housing, and Urban Affairs, chaired by Sen. Tim Scott (R-SC), received the referral and has done nothing with it since.

The reason is not hostility. It is calendar competition. The Senate Banking Committee spent the first half of 2026 focused on the Digital Asset Market Clarity Act, crypto market structure legislation that cleared committee 15-9 in May 2026. That bill consumed the available schedule. Capital formation reform went to the back of the line.

Senate passage of any major bill also requires 60 votes to break a filibuster. The INVEST Act's 302-123 House margin included 87 Democratic votes. That is a strong showing. But 87 House Democrats supporting a bill does not automatically translate into 60 Senate votes. Sen. Elizabeth Warren (D-MA) has voiced skepticism. And once the Senate amends the bill—which it almost certainly would—a House-Senate conference process begins. That takes more time and creates more opportunities for the bill to stall.

As of June 2026, no floor vote is scheduled.

The History That Should Worry You

This is not the first time Congress has passed a major capital formation bill with strong bipartisan support only to watch it expire in the Senate.

The JOBS and Investor Confidence Act of 2018, informally called JOBS Act 3.0, passed the House 406-4 on July 17, 2018. That 406-4 margin is one of the most lopsided bipartisan votes in recent Congressional history. The bill bundled 32 separate pieces of legislation, had backing from both Chairman Jeb Hensarling (R-TX) and Ranking Member Maxine Waters (D-CA), and included expanded accredited investor definitions and crowdfunding fixes that look nearly identical to provisions in the INVEST Act. Senate Majority Leader Mitch McConnell never brought it to a floor vote. The bill died at the end of the 115th Congress. Many of its provisions were enacted years later through other vehicles or SEC rulemaking.

The Fix Crowdfunding Act cleared the House 394-4 in July 2016. Same result. The Senate did not act. Its core provisions reappeared in JOBS Act 3.0 in 2018. Parts of JOBS Act 3.0 are now reappearing in the INVEST Act in 2025. The pattern is consistent: strong bipartisan House passage, Senate inaction, provisions recycled into the next round.

The INVEST Act's 302-123 margin is solid. It is not 406-4. And even 406-4 was not enough.

What to Watch If You Are an Accredited Investor

The exam-based pathway is the provision with the most practical consequence for the private investor market. If the bill passes and the SEC builds the exam as specified, any individual who passes, regardless of net worth or income, becomes eligible to participate in Regulation D offerings including angel deals, VC funds, and private placements. That is a real change to the structure of private markets.

SEC Chair Atkins's public endorsement matters here. The SEC could, in theory, create a similar pathway through rulemaking without waiting for the INVEST Act. The Commission began that process in 2020 when it added professional license holders to the accredited investor definition. But codifying an exam into statute is a different commitment. It removes future SEC discretion to reverse course and sets a hard one-year implementation deadline.

The inflation indexing provision in Section 201 cuts the other way. The $1M net worth threshold has not been adjusted since 1982. If you apply four-plus decades of inflation, that threshold would be roughly $3.3 million in 2025 dollars. Mandatory five-year indexing would gradually reduce the number of qualifying investors over time, creating a counter-pressure to the exam pathway expansion. Both provisions are in the same bill.

The HALOS Act provision matters if you participate in angel groups or attend demo days. Right now, Rule 148 provides the safe harbor, but it lives only in SEC regulation, not statute. A future SEC could revise it. Codifying it into the Securities Act creates a statutory floor that future commissions cannot undo through rulemaking. If you organize or present at angel group events, that difference is material.

For VC fund managers: the ICAN Act changes in Section 108 would let you accept up to 500 investors in a 3(c)(1) fund and deploy up to $50 million before crossing into Investment Company Act territory. The current $12 million cap has constrained emerging managers for years. A Senate companion bill, S.3880, covering the adviser AUM threshold provision was introduced by Senators Ruben Gallego (D-AZ) and Mike Rounds (R-SD) on March 16, 2026. That separate introduction suggests at least some senators want to advance individual provisions independently, even if the full INVEST Act stalls.

The Honest Assessment

Congress has introduced, advanced, and killed capital formation legislation three times in eight years. The Fix Crowdfunding Act. JOBS Act 3.0. Now the INVEST Act. Each time, the House passes the bill with strong numbers. Each time, the Senate does not act. Each time, the provisions get recycled into the next attempt.

The INVEST Act has genuine support from NVCA, ACA, ICI, SBIA, and the SEC Chair. The 302-123 House vote included real Democratic participation. The Trump administration is broadly supportive of deregulatory capital formation measures. Those are legitimate positive signals.

But the Senate Banking Committee is focused on crypto. Sen. Warren is skeptical. NASAA has given Senate opponents a policy hook to demand amendments on investor protection and Form D disclosure. The bill faces the same structural problem every predecessor faced: the Senate's 60-vote threshold and a legislative calendar that has higher priorities than capital formation reform.

Do not restructure your investment strategy around this passing. If it does pass, the exam pathway and the VC fund cap increases are the provisions that will matter most to you. Watch for Senate Banking Committee hearings as the first signal that the bill is getting serious attention. Watch for standalone Senate bills advancing individual provisions; that is already happening with S.3880. And watch the SEC's independent rulemaking calendar. Chair Atkins has signaled the Commission can act on some of these issues without waiting for Congress.

The bill is real. The reforms are substantive. The Senate is the problem. It has been the problem since 2016. Plan accordingly.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.