The INVEST Act Could Open the Floodgates for Private Markets

Access Is Expanding — and That Raises the Bar for Discipline

There’s a quiet but important signal coming out of Washington.

The U.S. House has passed the INVEST Act of 2025 — a broad capital-formation package aimed at modernizing how capital flows into growing companies. It’s not law yet. The Senate still needs to act. But the direction of travel is clear: policymakers recognize that more value creation is happening in private markets — and they’re exploring ways to expand access accordingly.

That matters.

Because for years now, companies have stayed private longer. The most meaningful value creation increasingly happens before IPO. If you’re only investing in public markets, you’re often arriving after much of the upside has already been captured.

At PrePublic Equity Partners (PEP), we focus on that late-stage, pre-IPO window. So when legislation contemplates broader participation in private markets, we pay attention.

Let’s break down what’s happening — and what it could mean.

What the INVEST Act Is Trying to Change

The bill addresses three areas that are especially relevant.

1. Larger “Qualifying Venture Capital Fund” Thresholds

One provision would expand the qualifying VC fund exemption — increasing allowable beneficial owners from 250 to 500 and raising capital limits from $10 million to $50 million.

Why this matters: If enacted, this could make it easier for more managers — particularly emerging managers — to raise larger venture funds without additional regulatory burden.

More funds means more capital flowing into private companies. That’s generally constructive for innovation. But it also increases competition for allocations and raises the importance of underwriting discipline.

Access without selectivity is just noise.

2. Greater Flexibility for Secondaries

The package also contemplates more flexibility around secondary transactions and related fund structures.

Secondaries have become the pressure-release valve of a market where IPO timelines are longer and liquidity is delayed.

We’re already seeing this shift. Liquidity today often comes through structured secondary transactions — not traditional public offerings.

Why this matters: Secondaries aren’t just a workaround. They’re becoming a core mechanism for how capital recycles and how investors gain exposure to maturing private companies.

That aligns directly with PEP’s focus: disciplined access to late-stage, venture-backed businesses in the pre-IPO window.

3. Expanding Accredited Investor Pathways

The INVEST Act also pushes toward broader “knowledge or competency” routes to accredited investor status — potentially including an SEC-directed exam framework.

Why this matters: If thoughtfully implemented, this could expand the eligible investor base for private offerings.

That’s a meaningful cultural shift.

But expanded access increases responsibility — for both investors and managers. Illiquidity, valuation dispersion, governance nuances — these are not trivial considerations. Private markets require clarity, not just enthusiasm.

Why This Is Happening Now

The public-company universe has shrunk over time. Regulatory burdens have risen. Meanwhile, private companies are staying private longer — and compounding value in that extended window.

Lawmakers are reacting to structural reality. More companies are staying private longer—so lawmakers are looking for ways to modernize capital formation in both public and private channels.

The venture ecosystem has already adapted. Longer hold periods. Fewer IPO exits. More structured liquidity. Greater reliance on secondaries.

The policy environment is beginning to catch up with market structure.

What This Could Mean for PEP

Let me offer three observations.

1. More Participation Is Coming — Research Becomes the Differentiator

If access expands, participation will increase.

That typically produces two things:

• More capital

• More noise

In that environment, the premium shifts to repeatable diligence, disciplined underwriting, and clear communication.

Private markets aren’t short on opportunity. They’re short on clarity.

Our view at PEP is that disciplined research, thoughtful structure, and long-term alignment will matter even more — not less — if the gates open wider.

2. Secondaries Become Even More Central

The Act’s explicit recognition of secondaries reflects what the market is already telling us.

Liquidity is increasingly achieved through secondary transactions rather than IPO timelines.

The pre-IPO window is where:

• Pricing dispersion can be meaningful

• Information quality varies dramatically

• Structure — transfer restrictions, timing, governance — matters enormously

This is not a passive market. It rewards preparation and punishes shortcuts.

3. The Bar Rises for Education and Transparency

With broader access comes greater need for investor understanding.

Private-company outcomes are nonlinear. Duration is long. Valuations fluctuate. Liquidity is episodic.

If participation expands, the firms that will earn trust are those that set expectations properly and communicate clearly.

Access without education leads to disappointment.

Access paired with discipline builds durable capital.

What We’re Watching

The INVEST Act has momentum, but the details matter.

We’re monitoring:

• Whether the qualifying VC threshold changes survive the Senate process

• How any accredited investor competency framework is structured

• The downstream impact on secondary market liquidity and pricing dynamics

  
  

Policy shifts rarely transform markets overnight. But they do shape capital flows over time.

And we are very much in this for the long term.

The Bottom Line

Private markets are where much of the value is accruing.

The INVEST Act signals recognition of that reality.

If implemented thoughtfully, it could expand participation and accelerate capital formation. But greater access increases the premium on discipline, structure, and transparency.

At PEP, our focus remains unchanged:

Disciplined exposure to late-stage private companies in the pre-IPO window — with a long-term orientation and a commitment to clarity.

Because access is powerful.

But access paired with excellence is what compounds.

To stay up-to-date on our fund and research, fill out the form below.

THEMATIC RESEARCH DISCLOSURE: This article is for informational purposes only and represents the thematic analysis of Prepublic Equity Partners ("PEP"). This content is intended to discuss industry trends and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any securities. PEP is not a registered investment adviser or broker-dealer.

Private company data and "pre-IPO" mentions are based on available market reports and have not been independently verified. Investing in late-stage venture capital involves high risk and illiquidity. PEP or its affiliates may hold financial interests in the companies or sectors discussed, and we reserve the right to trade these positions at any time without notice.