Venture capital firms are renewing calls for a tailored regulatory framework, arguing that existing investment adviser rules—originally crafted with Wall Street in mind—are stifling innovation and growth in the startup ecosystem.
With a change in leadership at the White House and key financial agencies, the National Venture Capital Association (NVCA) and its partners are advocating for revisions to the Investment Advisers Act that would modernize exemptions specific to VC firms. Their focus includes loosening limits on fund asset sizes and expanding the range of eligible investment types that qualify under the venture capital exemption.
Currently, VC firms benefit from a narrow exemption from SEC registration, but critics say the criteria are outdated and poorly aligned with how modern venture capital operates—particularly in areas like climate tech, deep tech, and hybrid fund structures.
NVCA President Bobby Franklin has previously noted that the regulatory framework “hasn’t kept pace with the realities of today’s startup funding landscape,” and that overly rigid definitions may inhibit capital formation and limit flexibility for emerging fund managers.
The renewed lobbying effort comes amid broader discussions in Washington around financial deregulation and tech-sector competitiveness. Industry leaders hope that fresh policy momentum will create space for a more agile regulatory environment without compromising investor protections.
Portions of this report reference information from PitchBook News, including original reporting by Jenna O’Malley.
