DEAL Act Paves Way for More Startups Enhancing U.S. Economy

March 24, 2022

Contact: Sabrina Fang
Phone: 703-283-2091

WASHINGTON, DC – NVCA is excited to see the reintroduction of the Developing and Empowering our Aspiring Leaders (DEAL) Act by Senator Mike Rounds (R-SD), a longtime legislative priority that will help improve returns and capital formation in the initial stages of the startup ecosystem.

“This bill will support the next generation of high growth American companies and expand entrepreneurial activity into more regions of the country,” said Bobby Franklin, NVCA President and CEO. “U.S. startups are this country’s jobs and innovation engine, and improving their chances of success will generate economic opportunity and support America’s technological leadership in the world.”

The DEAL Act will allow venture capital funds to acquire more shares from founders, angel, and seed stage investors, and provide capital to emerging VC funds, without triggering the costs and burdens of fund registration. These early-stage investors will then be able to recycle their gains into the next generation of new American companies.

NVCA is grateful for Senator Rounds’ strong leadership and his support for patient capital investment and long-term company growth.


  • Currently, VCs must register with the SEC as an Exempt Reporting Advisor and ensure that more than 80 percent of their activities are in qualifying investments, defined as direct investments into private companies.
  • Otherwise, they must become Registered Investment Advisors (RIAs), a designation that was only meant for private equity and hedge funds, adding costs and complexities for VC firms.
  • NVCA survey data found that RIA funds report annual compliance costs eight times as large as ERA funds. As companies have stayed private longer, secondary investments have become more prominent in VC financing rounds.
  • These investments are a significant source of liquidity for founders and early-stage investors who can then recycle the capital into a new round of nascent companies.
  • In addition, VC investments into other VC funds are not considered qualifying investments. “Fund of funds” investments from established VC funds seed emerging managers and encourage greater distribution of venture capital activity.


About National Venture Capital Association
The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the US venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about NVCA, please visit