SEC Proposes Inflation Adjustment for Qualifying Venture Capital Fund Definition | Practical Law

SEC Proposes Inflation Adjustment for Qualifying Venture Capital Fund Definition | Practical Law

The SEC proposed a new rule to adjust for inflation the dollar threshold for a fund to qualify as a "qualifying venture capital fund" for purposes of the Investment Company Act of 1940.

SEC Proposes Inflation Adjustment for Qualifying Venture Capital Fund Definition

Practical Law Legal Update w-042-3440 (Approx. 3 pages)

SEC Proposes Inflation Adjustment for Qualifying Venture Capital Fund Definition

by Practical Law Corporate & Securities
Published on 15 Feb 2024USA (National/Federal)
The SEC proposed a new rule to adjust for inflation the dollar threshold for a fund to qualify as a "qualifying venture capital fund" for purposes of the Investment Company Act of 1940.
On February 14, 2024, the SEC proposed a new rule to adjust for inflation the dollar threshold for a fund to qualify as a "qualifying venture capital fund" for purposes of the Investment Company Act of 1940 (ICA). The proposal would raise the threshold from $10 million aggregate capital contributions and uncalled committed capital to $12 million. The proposed rule also includes a mechanism for the SEC to further adjust the threshold for inflation by order every five years. Funds meeting the definition of "qualifying venture capital fund" are excluded from the definition of "investment company" under the ICA.
For more information on venture capital funds and their role in startup venture financing, see Practice Notes, Private Equity Fund Formation and Startup Venture Finance: Overview.