Improving Capital Allocation for Newcomers Act of 2025

This bill, called the Improving Capital Allocation for Newcomers Act of 2025, updates how certain venture capital funds are defined under existing law. It lets these funds have up to 500 investors instead of 250 and raises a dollar cap in the law to $50 million, which changes who can count as a “qualifying venture capital fund” under that law.

Five years after it becomes law, a federal small-business capital advocate, working with the investor advocate, must study how these changes affect the companies that get investment. The study must look at where money flows across the country, the backgrounds of founders (including veterans), and the types and stages of companies. They must report the findings to Congress and post them online. Then the public gets 180 days to comment. If the report shows these changes clearly increased the spread of capital, the variety of founder backgrounds, or the number of veteran founders, the Commission may adjust the numbers: it can move the 500‑investor limit between 250 and 750, and the $50 million limit between $10 million and $100 million. Any proposed rule must be issued within a set window, and the usual inflation adjustment rule still applies.

Key points

• Who is affected: certain venture capital funds; the businesses and startups they invest in; founders (including veterans); and the public, who can comment on the findings.
• What changes: investor limit rises from 250 to 500; a dollar cap is set at $50 million; later, the Commission may change these within set ranges if the study shows clear positive effects .
• When: changes take effect upon enactment; the study starts 5 years after; public comment lasts 180 days after the report; any proposed rule must be issued in the next 180‑day window.