INVEST Act Boosts Crowdfunding Cap to $250K, Opens High-Risk Investments to More Professionals

The new Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025—the INVEST Act—is basically a major tune-up for how small businesses and startups raise money, and it changes who gets to play in the high-stakes world of private investments. Think of it as a policy push to get more cash flowing to entrepreneurs, especially those outside the usual Silicon Valley hotspots.

The Startup Fundraising Game Just Got Easier

For entrepreneurs, especially those in rural areas, this bill is a big deal. The legislation expands eligibility for certain SEC programs to include "rural-area small businesses," putting them on par with other favored groups when it comes to accessing resources. More importantly, it raises the ceiling on online crowdfunding. Right now, a company can only raise $100,000 via platforms like Kickstarter or similar securities crowdfunding sites over 12 months. The INVEST Act more than doubles that cap to $250,000, with the SEC having the authority to push it up to $400,000 later. For a startup trying to launch a new product or open a second location, that extra capital can be the difference between staying afloat and scaling up.

Another key change is that startups can now advertise their fundraising efforts at "sponsored events" hosted by universities or non-profits. Previously, advertising private offerings was severely restricted. This new exception means a startup founder can pitch their idea at a local angel investor meeting without violating strict SEC rules. While this is great for visibility, the bill is a little vague on what constitutes a 'sponsored event' and what 'strict rules' the sponsors must follow, which could potentially create loopholes for less scrupulous promoters.

Who Gets to Be an 'Accredited Investor' Now?

This is where the bill changes the rules for individual investors, potentially affecting a lot of professionals aged 25-45. Currently, to invest in high-risk private companies (like venture capital funds or early-stage startups), you must be an "accredited investor," which usually means having a net worth over $1 million or earning over $200,000 annually. The INVEST Act expands this definition significantly. Now, you can qualify based on professional licenses (like holding a Series 7 broker license) or by demonstrating "professional knowledge." The SEC is even required to create a certification exam—pass it, and you’re in, regardless of your income or wealth.

On one hand, this is a win for fairness. If you’re a mid-career engineer or a financial analyst who understands risk but doesn't meet the wealth threshold, you can now access investments previously reserved for the ultra-rich. On the other hand, these private investments are high-risk and illiquid. Expanding access means more people who aren’t wealthy enough to absorb a total loss might be exposed to investments that lack the consumer protections of publicly traded stocks. The bill is essentially saying, "If you know the risks, you can take them," but it’s crucial for these newly qualified investors to understand they are trading protection for opportunity.

More Sunlight on Corporate Power

The bill also takes a swing at corporate governance, particularly regarding companies that use multi-class stock structures. This is when a company issues different classes of shares where founders or insiders get 10 votes per share, and the public gets one. It’s a way for executives to raise money while keeping total control. The INVEST Act mandates that companies with these structures must provide new, clear disclosures detailing the actual voting power held by key executives and large shareholders. This doesn't stop the practice, but it forces the company to be upfront about who’s really running the show, which is a necessary win for transparency for the average public shareholder.

The Shift to Digital and Senior Protection

Finally, get ready for less paper. The bill creates a default system for electronic delivery of investor documents, like statements and prospectuses. While companies must notify you before switching and provide an easy opt-out, this is a clear signal that paper statements are heading for extinction. This is convenient for digital natives, but regulators will need to watch closely to ensure the opt-out process is genuinely simple for older or less tech-savvy investors. To address the vulnerabilities of that group, the bill also establishes a Senior Investor Taskforce within the SEC and mandates a study on the financial exploitation of citizens over 65, focusing regulatory attention where protection is needed most.