The Security and Exchange Commission (SEC) has recently increased the dollar threshold for a vehicle to qualify as a “venturing venture fund” from $10 million to $12 million. This update was announced in a press release on their website.
Qualified venture funds are a specific category within the venture capital industry that can raise funds from up to 250 accredited investors. They are exempt from registering with the SEC as an investment company, as long as they adhere to the major regulations for venture capital funds. The only other way for a private fund to be exempt from SEC registration is to have no more than 100 investors.
Smaller venture capital funds, often termed as emerging funds, have been most affected by the recent downturn in the venture capital market that began in 2022. The timing of the SEC’s inflation adjustment, which is done every 5 years, is beneficial for these smaller VCs who may be struggling due to the current market conditions. These emerging funds, which typically receive smaller investments from a larger number of investors, will benefit from the increased threshold set by the SEC.
