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SEC Makes Life Easier for Smaller VCs

The SEC has increased the dollar threshold for a vehicle to be classified as a “qualifying venture fund” from $10 million to $12 million

Qualified venture funds are a subset exempt from the financial burdens of being an investment company and are not required to register with the SEC. They can raise funds from up to 250 accredited investors. However, they must still comply with the major regulations of being a VC fund. The sole alternative method by which a private fund can avoid registration with the SEC as an investment company is if it has a maximum of 100 investors.

SEC Chairman Gary Gensler | Source, CNBC

The VC bear market that commenced in 2022 has had the most severe impact on emerging funds, which are most likely to receive smaller payments from investors and, as a result, require additional investors. Although the new SEC rule is a routine inflation adjustment that the SEC reviews every five years, it is implemented at a time when smaller VCs could benefit greatly from such assistance.

James Emmanuel

James is a Computer Science student with a robust foundation in tech and a skilled DevOps engineer. His technical expertise extends to his role as a news reporter at Protechbro, where he specializes in crafting well-informed, technical content that highlights the latest trends and innovations in technology.

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