Expanding American Entrepreneurship Act

## Summary This bill, titled the *Expanding American Entrepreneurship Act*, updates exemptions in the Investment Company Act of 1940, a law that regulates investment funds to protect investors. Currently, certain private investment funds (like venture capital or private equity firms) can avoid registering as formal investment companies if they meet specific criteria, such as having fewer than 250 investors or less than $10 million in assets. The bill raises these thresholds: funds with up to 500 investors or $50 million in assets would now qualify for the same exemption. The goal is to reduce regulatory burdens on smaller or mid-sized investment funds, allowing them to grow larger without triggering stricter compliance requirements. Supporters argue this encourages innovation and investment in startups, while critics may worry about reduced oversight for bigger funds. ## Key Points - Raises investor threshold: Increases the limit for unregistered investment entities from 250 to 500 investors. - Raises asset threshold: Exempts funds with less than $50 million in assets (up from $10 million) from registration. - Targets private funds: Applies to entities like venture capital firms, private equity funds, and hedge funds that rely on these exemptions. - Reduces regulatory requirements: Funds below the new thresholds avoid rules on disclosures, governance, and reporting under the 1940 Act. - Maintains core exemptions: The bill does not eliminate the exemption but adjusts its scope to reflect modern market conditions. ## Impact Areas - Private investment funds: Venture capital, private equity, and hedge funds can grow larger without registering under the 1940 Act. - Startups and small businesses: Easier access to capital from larger exempt funds may boost funding opportunities. - Financial regulation and investor protection: Relaxes oversight for mid-sized funds, potentially balancing economic growth with reduced transparency safeguards.