The SEC has updated the dollar threshold for a vehicle to be considered a “qualifying venture fund” to $12 million from $10 million.
Qualified venture funds are a subset of venture funds that can raise from up to 250 accredited investors while also being exempt from having to register with the SEC as an investment company and take on the financial burdens of such (they must still adhere to the major regulations of being a VC fund). The only other way a private fund can remain exempt from registering with the SEC as an investment company is if it has no more than 100 investors.
Emerging funds – those most likely to get smaller checks from investors and therefore need more investors – have been hardest hit by the VC bear market that began in 2022. While the new SEC rule is a routine inflation adjustment that the SEC revisits every 5 years, it comes at a time when smaller VCs could really use such help.