Developing and Empowering our Aspiring Leaders Act of 2025

H.R. 4429, the Developing and Empowering our Aspiring Leaders Act of 2025, would require the Securities and Exchange Commission (SEC) to revise how it defines a “qualifying investment” for purposes of the private fund adviser exemption under the Investment Advisers Act of 1940. Specifically, the bill directs the SEC to (1) add equity securities issued by a qualifying portfolio company (whether obtained directly or via secondary acquisition) to the list of qualifying investments, and to include investments in other venture capital funds; and (2) impose a new ownership benchmark on private funds seeking VC-fund status: at least 51% of the fund’s aggregate capital contributions and uncalled committed capital (excluding short-term holdings) must be in direct equity securities from qualifying portfolio companies, while up to 49% may be investments in one or more venture capital funds and securities acquired in secondary acquisitions. The SEC would have 180 days after enactment to implement these changes. In practical terms, this bill would expand what counts as a qualifying investment (to include portfolio-company equity and fund-of-funds investments) but would simultaneously require a majority, direct-exposure focus to portfolio-company equity to qualify for the VC-fund exemption. The changes would shape how venture capital funds structure investments and manage capital to maintain the exemption from registration for advisers.