House Passes INVEST Act, Sending Capital Access Overhaul to Senate

The bill is intended to reduce regulatory friction that has made it harder for entrepreneurs and regional businesses to tap funding programs traditionally concentrated in major financial hubs.

The bill arrives amid growing concern in Washington that outdated capital formation rules are limiting innovation, shrinking public markets, and leaving many small businesses without viable paths to growth financing. Lawmakers backing the measure frame it as the most significant update to securities law since the JOBS Act of 2012.

At its core, the INVEST Act seeks to modernize how federal securities regulations treat small businesses, investors, and early-stage capital providers. The legislation directs regulators, particularly the Securities and Exchange Commission (SEC), to revise definitions and thresholds that determine which entities qualify as “small” under federal rules. By doing so, it aims to ensure that future rulemakings account for the real-world compliance burdens faced by smaller firms.

The bill also raises and clarifies thresholds for venture capital funds, reducing bottlenecks that can prevent capital from reaching startups and growing businesses. Supporters argue that these changes would make it easier for funds to invest in early-stage companies without triggering costly regulatory requirements that were designed for far larger financial players.

For small and mid-sized businesses, the legislation is intended to expand access to capital beyond traditional coastal markets. Lawmakers say current securities rules have unintentionally concentrated venture funding in a handful of regions, leaving entrepreneurs in the Midwest, South, and rural areas at a disadvantage.

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By adjusting regulatory thresholds and modernizing compliance frameworks, the INVEST Act aims to lower the cost of raising capital and broaden the pool of potential investors. The bill also seeks to make it easier for companies to stay private longer or transition to public markets without facing disclosure requirements that critics say are overly complex and expensive for smaller firms.

In an op-ed published by The Hill, House Financial Services Committee Chairman French Hill described the bill as a response to structural weaknesses in U.S. capital markets. “While small businesses and entrepreneurs are the vital fuel sparking job creation and innovation, our outdated securities laws are wet logs,” Hill wrote, arguing that existing rules actively stifle growth and limit investment opportunities

Hill pointed to the sharp decline in the number of publicly traded U.S. companies over the past two decades as evidence that reforms are overdue. He also argued that current rules unfairly exclude knowledgeable investors from private markets based solely on wealth rather than financial expertise.

Supporters say the legislation would make U.S. markets more competitive globally by reducing incentives for companies to seek capital overseas. It also allows companies to more easily gauge investor interest before pursuing an initial public offering, lowering the risks associated with going public.

As the bill moves to the Senate, its prospects remain uncertain, though bipartisan House support may improve its chances. Hill framed the legislation as part of a broader effort to ensure U.S. capital markets remain globally competitive. “Through the INVEST Act, the House Financial Services Committee delivers by re-igniting U.S. capital markets,” he wrote, adding that the goal is to expand access to more Americans while preserving market integrity.