IIB 
119TH CONGRESS 
1ST SESSION H. R. 4431 
IN THE SENATE OF THE UNITED STATES 
DECEMBER 2, 2025 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To amend the Investment Company Act of 1940 with respect 
to the definition of qualifying venture capital funds, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Improving Capital Al-
location for Newcomers Act of 2025’’. 
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) in the matter preceding subparagraph (A), 
by striking ‘‘250 persons’’ and inserting ‘‘500 per-
sons’’; and 
(2) in subparagraph (C)(i)— 
(A) by striking ‘‘$10,000,000’’ and insert-
ing ‘‘$50,000,000’’; and 
(B) by striking ‘‘beginning from a meas-
urement made by the Commission on a date se-
lected by the Commission’’ and inserting ‘‘be-
ginning from a measurement made on the date 
of the enactment of the Improving Capital Allo-
cation for Newcomers Act of 2025’’. 
SEC. 3. STUDY AND RULEMAKING. 
(a) STUDY REQUIRED.— 
(1) 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 quali-
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fying venture capital funds invest, specifically includ-
ing, with respect to such businesses and startup en-
tities, changes or trends relating to— 
(A) the geographic distribution of capital 
to portfolio companies; 
(B) the socio-economic characteristics of 
founders or controlling persons; 
(C) the veteran status of founders or con-
trolling persons; 
(D) the industry sector, size, stage of de-
velopment, and related details; and 
(E) other factors or metrics determined by 
the Advocate for Small Business Capital For-
mation. 
(2) AUTHORITIES
RELATED
TO
REQUIRED 
STUDY.—For purposes of conducting the study re-
quired by paragraph (1), the Advocate for Small 
Business Capital Formation and the Investor Advo-
cate shall have authority to— 
(A) obtain from the Securities and Ex-
change Commission (in this section referred to 
as the ‘‘Commission’’) and utilize any data or 
information necessary to carry out the study; 
(B) request and receive assistance from 
any division or office of the Commission, includ-
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ing the Division of Economic and Risk Anal-
ysis; and 
(C) enter into agreements with third par-
ties to assist in data analysis. 
(b) REPORT.—The Advocate for Small Business Cap-
ital Formation shall issue a report to the Congress con-
taining all findings and determinations made in carrying 
out the study required by subsection (a)(1), and make 
such report available to the public on the website of the 
Commission. 
(c) PUBLIC COMMENT.—During the 180-day period 
beginning on the date the report is issued under sub-
section (b), the Commission shall solicit feedback from the 
public on the findings and determinations contained in the 
report. 
(d) RULEMAKING.— 
(1) IN
GENERAL.—The Commission, in con-
sultation with the Investor Advocate and the Advo-
cate for Small Business Capital Formation, may, 
after considering all comments received under sub-
section (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 ge-
ographic distribution of capital to portfolio compa-
nies, increasing the variety of the socio-economic 
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characteristics of founders or controlling persons, or 
increasing the number of founders or controlling 
persons who are veterans, issue rules to— 
(A) increase or decrease the 500 person 
threshold described in the matter preceding 
subparagraph (A) of section 3(c)(1) of the In-
vestment Company Act of 1940, but such 
threshold may not exceed 750 persons or be re-
duced below 250 persons; and 
(B) increase or decrease the $50,000,000 
dollar figure in section 3(c)(1)(C)(i) of the In-
vestment Company Act of 1940, but such dollar 
figure may not exceed $100,000,000 or be re-
duced below $10,000,000. 
(2) DEADLINE FOR RULEMAKING.—The rule-
making 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 sub-
section (c). 
(3) NO
EFFECT
ON
INFLATION
ADJUST-
MENTS.—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)), as amend-
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ed by section 2, to index the first dollar amount in 
such clause for inflation. 
Passed the House of Representatives December 1, 
2025. 
Attest: 
KEVIN F. MCCUMBER, 
Clerk. 
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