JOBS Act 4.0: a new era of venture investing?

• The JOBS Act 4.0 proposes updates to democratize access to private markets and modernize venture regulations.

• Key changes include expanding the definition of “qualifying VC” investments to include secondaries and funds-of-funds.

• The act would increase investor caps and allow broader self-attestation of accredited investor status under Rule 506(c).

• These updates could reduce regulatory burden for emerging managers and accelerate capital formation.

• Sydecar supports these reforms as a pathway to greater participation and transparency in venture investing.

The JOBS Act, originally passed in 2012, is regularly cited as one of the most significant regulation changes in the history of private investing. Now, almost a decade later, Congress is assessing an update to this legislation — referred to as JOBS Act 4.0 — which has huge implications for both emerging and aspiring venture investors.

The 2012 Act notably increased access to private markets, specifically through Regulation Crowdfunding, which allowed private companies to raise money from non-accredited investors, and the addition of Rule 506(c), which allowed general solicitation of fund offerings. While the 2012 Act (Reg CF specifically) gave retail investors the opportunity to invest in startups for the first time, it did little to meaningfully advance opportunities for venture capitalists.

Today, VCs have to navigate a regulatory minefield to ensure compliance with the Investment Company Act, Investment Adviser Act and Broker-Dealer regulation. The current regulatory regime limits VCs in the following ways:

Only “accredited investors,” representing ~2% of the US population, are permitted to invest in startup companies.

The majority of VCs abstain from secondary, “fund-of-fund” (FoF), and crypto investments altogether due to the risk of having to register as an investment adviser (RIA). Investors participating in these types of deals must either keep AUM under $150M or become an RIA (which comes with an abundance of restrictions and requirements).

VC funds are capped at a maximum of 99 or 249 (accredited) investors (depending on how much they raise), or must create a second “parallel” fund structure which is costly and can only accept qualified purchasers.

If leveraging Rule 506(c) “general solicitation” (noted above), VCs must actively verify the accreditation status of all participating investors.