Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025

The Increasing Investor Opportunities Act would modify the Investment Company Act of 1940 to allow closed-end investment companies (including business development companies, or BDCs) to invest in private funds. The bill sets that the Securities and Exchange Commission (SEC) may not outright prohibit or unduly restrict such investments, nor impose funding restrictions on the sale or listing of closed-end fund securities that invest in private funds. It also clarifies that exchanges cannot block listing or trading of these closed-end funds solely because they invest in private funds, so long as rules are consistent with the new authority. The bill defines “private fund” by reference to the Investment Advisers Act and expands certain investment-exemption provisions (3(c)(1)/(7)) to include an additional category. Finally, it preserves existing fiduciary duties and liquidity/redemption requirements, and explicitly applies the new authority to funds that elect to be treated as BDCs. In short, the bill would open the door for closed-end funds to access private funds as investments, with broad protections and limits designed to keep existing investor protections in place while expanding investment opportunities and potential liquidity for private fund access through closed-end vehicles.