# Plain Language Summary: Developing and Empowering our Aspiring Leaders Act of 2023

This bill makes it easier for venture capital funds to operate without heavy government oversight. Right now, venture capital fund managers have to register with the Securities and Exchange Commission (SEC) and follow strict rules, which costs money and takes time. This bill creates an exemption that lets certain venture capital funds skip that registration process, but only if they meet specific requirements about what kinds of investments they make.

The main change is expanding what counts as a "qualifying investment" for these exempt funds. Currently, the rules are pretty narrow about what investments qualify. This bill says that equity stakes in startup companies (basically owning a piece of a company) should count as qualifying investments, whether the fund buys those stakes directly from the company or purchases them secondhand from other investors. It also clarifies that investing in other venture capital funds counts as a qualifying investment. This gives fund managers more flexibility in how they structure their portfolios.

To get the exemption from registration, a venture capital fund would need to prove that most of its investments fall into these categories—either they're mostly direct stakes in startups, or mostly investments in other venture capital funds. The SEC has 180 days from when this bill becomes law to write the official rules explaining exactly how this works. In practical terms, this could make it cheaper and faster for venture capital funds to get started, which supporters argue could help more startups get funding. However, the tradeoff is that these funds would have less SEC oversight, which means less government protection for the investors putting money into them.

Developing and Empowering our Aspiring Leaders Act of 2023

Barr, Andy

Developing and Empowering our Aspiring Leaders Act of 2023 This bill directs the Securities and Exchange Commission to revise venture capital investment regulations. Venture capital funds are exempt from certain regulations applicable to other investment firms, including those related to filings, audits, and restricted communications with investors. Under current law, non-qualifying investments&#8212;which include secondary transactions and investments in other venture capital funds&#8212;may comprise up to 20% of a venture capital fund. The bill allows investments acquired through secondary transactions or investments in other venture capital funds to be considered as qualifying investments for venture capital funds. However, for a private fund to qualify as a venture capital fund, the fund's investments must predominately (1) be acquired directly, or (2) be investments in other venture capital funds.