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Bill
Notes

H.R. 4431 — what changed

Improving Capital Allocation for Newcomers Act of 2025

From Introduced in House to Reported in House. 1 section amended and 1 added between Introduced in House and Reported in House.

Sec. 2 Qualifying venture capital funds

Section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(1)) is amended—

(1)
changed in the matter preceding subparagraph (A), by striking “250 persons” and inserting “2,000 “500 persons”; and
(2)
changed in subparagraph (C)(i), by striking “$10,000,000” and inserting “$150,000,000”.“$50,000,000”.

Sec. 3 Study and rulemaking

added
(a)
added In general— Beginning 5 years after the date of enactment of this Act, the Advocate for Small Business Capital Formation, in consultation with the Investor Advocate, shall conduct a study on the effect of the amendments made by section 2 on the businesses and startup entities in which qualifying venture capital funds invest, specifically including, with respect to such businesses and startup entities, changes or trends relating to—
(1)
added the geographic distribution of capital to portfolio companies;
(2)
added the socio-economic characteristics of founders or controlling persons;
(3)
added the veteran status of founders or controlling persons;
(4)
added the industry sector, size, stage of development, and related details; and
(5)
added other factors or metrics determined by the Advocate for Small Business Capital Formation.
(b)
added Report— The Advocate for Small Business Capital Formation shall issue a report to the Congress containing all findings and determinations made in carrying out the study required in subsection (a), and make such report available to the public on the website of the Commission.
(c)
added Public comment— During the 180-day period beginning on the date the report is issued under subsection (b), the Commission shall solicit feedback from the public on the findings and determinations contained in the report.
(d)
added Rulemaking—
(1)
added In general— The Commission, in consultation with the Investor Advocate and the Advocate for Small Business Capital Formation, may, after considering all comments received under subsection (c) and only if the Commission determines in such report that the amendments made by section 2 have had a demonstrable effect on increasing the geographic distribution of capital to portfolio companies, increasing the variety of the socio-economic characteristics of founders or controlling persons, or increasing the number of founders or controlling persons who are veterans, issue rules to—
(A)
added increase or decrease the 500 person threshold described in the matter preceding subparagraph (A) of section 3(c)(1) of the Investment Company Act of 1940, but such threshold may not exceed 750 persons or be reduced below 250 persons; and
(B)
added increase or decrease the $50,000,000 dollar figure in section 3(c)(1)(C)(i) of the Investment Company Act of 1940, but such dollar figure may not exceed $100,000,000 or be reduced below $10,000,000.
(2)
added Deadline for rulemaking— The rulemaking authority in paragraph (1) only applies to a rule with respect to which the proposed rule was issued during the 180-day period beginning at the end of the public comment period described in subsection (c).
(3)
added No effect on inflation adjustments— A rule issued under this subsection shall have no effect on the requirement under clause (i) of section 3(c)(1)(C) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(1)(C)) to index the first dollar amount in such clause for inflation.