The SEC raised the threshold for a fund to be considered a “qualified venture fund” from $10 million to $12 million.
A qualified venture fund is a subset of venture funds that can raise capital from up to 250 accredited investors and is not required to register with the SEC as an investment company and is exempt from the financial burdens of being an investment company (though it must adhere to the core regulations as a VC fund). The only way a private fund does not have to register with the SEC as an investment company is if it has 100 or fewer investors.
Emerging funds — those that are more likely to receive smaller checks from investors and therefore need more investors — have been hit hardest by the VC bear market that began in 2022. The SEC's new rules, a periodic inflation adjustment that the SEC reviews every five years, come at a time when smaller VCs really need that help.