Private Markets Are Getting a Makeover: What 2025 SEC Reforms Mean for Startup and Angel Investors

What's happening: Two rules with outsized impact

1) Regulation A - a middle lane between private and public

Reg A lets companies raise public capital without becoming fully public. In 2020, the SEC raised the Tier 2 cap from 50 million to 75 million, a meaningful step that still left frictions in place.

In 2025, the SBCFAC focused on what still doesn't work, particularly investor exits and the patchwork around secondary trading, and gathered practitioner feedback on practical fixes. The agenda explicitly called out "exit opportunities for investors in Regulation A deals and secondary market liquidity challenges."

2) Finders - bringing sunlight to a gray market

"Finders" are the connectors who introduce startups to accredited investors. The SEC floated a two-tier exemption in 2020 but never adopted it. In July 2025, Commissioner Hester Peirce urged the Committee to re-examine that approach and asked pointed questions about whether a different, more workable model is needed. Translation - the door is open to a simpler path that acknowledges how deals actually get done.

Legal and policy commentators have echoed the need for clarity in 2025, highlighting the shortcomings of the old two-tier design and the benefits of a narrower safe harbor calibrated to accredited-only introductions.

Why this matters for private investors

At VIP Wealth Advisors, many of our clients are accredited investors who like asymmetric-upside ideas:

• Angel investments
• Revenue-share deals
• Specialty private funds
• Early-stage real estate and PropTech plays

The friction points are familiar:

• Reg A is promising but clunky - expensive legal work, heavy disclosures, and uncertain secondary liquidity.
• Finders operate everywhere, but in legal limbo, which adds counterparty risk and can muddy cap tables if compensation is not structured correctly.

When regulators tighten the bolts here - making Reg A usable and giving finders a defined lane - investors benefit. You get cleaner documents, clearer disclosures, and more legally durable pathways into deals.

Regulation A today: better than 2015, still not "easy"

Reg A offerings come in two tiers:

• Tier 1 - up to 20 million. Requires state-level qualification, creating a multi-state Blue Sky process that can be a logistical grind.
• Tier 2 - up to 75 million. Federal preemption of state review helps, but companies need audited financials and ongoing reports that look like a mini-IPO.

Issuers and investors still face real-world challenges after a successful raise: how and where will shares trade, and what information must be public for broker-dealers to quote those shares? The SEC and FINRA have spent the past few years clarifying 15c2-11 obligations in OTC markets - the rule that governs when broker-dealers can publish quotes. While the 2024 fixed-income no-action letter doesn't directly solve Reg A equity liquidity, it shows the staff's willingness to clarify quoting rules to reduce frictions in secondary markets.

Industry venues are evolving too. The OTC Markets Group updated tiers in 2025, replacing "Pink Current" with the "OTCID Basic Market," a sign of continued optimization in disclosure-driven OTC trading. For Reg A issuers, aligning disclosures to facilitate OTC quoting remains a practical path to secondary liquidity.

Some platforms also operate ATSs intended to trade Reg A, Reg CF, and Reg D shares - a step toward more consistent liquidity, even if actual quoting breadth remains thin today.

What could change next

The SBCFAC highlighted several areas that could make Reg A more usable:

• Streamlining Tier 2 ongoing reporting while preserving investor protections
• Addressing secondary-trading pain points so investors have a more straightforward exit path
• Reducing state-by-state friction points that persist around Tier 1 and resales
• Encouraging alignment between issuer disclosures and what broker-dealers need to make markets under 15c2-11

Even incremental moves here can unlock better outcomes. The Committee's 2025 agendas were explicit about considering investor exits and liquidity in Reg A, which has long been the Achilles' heel of otherwise successful raises.

The finder's problem: who brought you this deal?

Every private investor has seen this movie:

"Hey, a founder I know is opening a round - want an intro?"

That's a finder. Under the current regime, getting paid to introduce investors to issuers can pull you into broker-dealer territory. The SEC's 2020 proposal tried a two-tier carve-out for natural-person finders - allowing limited activity in accredited-only deals - but stalled amid concerns that the tiers were either too restrictive to be useful or too permissive to protect investors.

In July 2025, Commissioner Peirce essentially asked the Committee whether a cleaner approach would be better than trying to salvage the 2020 two-tier draft. Law-firm analyses this summer similarly outlined practical, narrower frameworks that could recognize real-world practices without opening the floodgates.

Why you should care

• If you invest through informal networks, you are likely relying on finders even if no one uses that label.
• Issuers that compensate unregistered intermediaries can create rescission risk and regulatory exposure.
• A defined safe harbor would professionalize the gray market and improve documentation, disclosures, and diligence standards.

Connecting the dots: Reg A + finders = a smarter deal pipeline

These two tracks are linked. Founders without big-firm VC access need efficient, compliant ways to raise. Investors need a clean route to evaluate, subscribe, and eventually exit positions. If Reg A becomes easier to use and finders get a workable safe harbor, the result is a healthier mid-market:

• Better structured introductions
• Cleaner offering documents aligned with ongoing disclosure
• More predictable secondary options
• Broader geographic reach beyond the Silicon Valley - NYC - Miami corridor

Multiple 2025 meeting notices and commentaries point to exactly this: focus on improving Reg A's use in the wild and finally settling the finder's question to support small-business fundraising.

What's new in 2025 beyond Reg A and finders

While not the headline, there's an adjacent movement investors should clock. In March 2025, the SEC updated portions of its Compliance and Disclosure Interpretations that affect how issuers verify accredited status in Rule 506(c) offerings, reaffirming the "reasonable steps" facts-and-circumstances test and when a high minimum check size may contribute to verification. For investors, that can translate to more consistent subscription processes across private funds and syndications.

That matters because most early-stage allocations still flow through Reg D 506(b)/(c). Cleaner verification practices reduce friction, speed allocation decisions, and lower the odds that a misstep taints an otherwise good deal.

How to prepare as an investor

Here's how we're advising clients to get ahead of the curve as regulatory gears turn:

Our view: the infrastructure is finally catching up

For years, accredited investors have faced a frustrating choice:

• High-quality, inaccessible venture deals
• Lower-quality, messy private placements

Reg A's 2020 increase to a 75 million cap helped, but didn't fix exits. The 2025 SEC advisory focus on Reg A secondary liquidity, along with a fresh look at the finders problem, is a meaningful signal that the Commission wants to make the middle market work better. None of this eliminates risk. But it does raise the floor on structure, transparency, and liquidity planning - exactly where many private deals have historically fallen short.

At VIP Wealth Advisors, we're closely tracking the Committee's discussions and any subsequent Commission actions, because small rule changes at the infrastructure layer can compound into better outcomes for sophisticated investors; more choice, clearer documents, and more realistic exit pathways.

Practical checklist you can use before wiring funds

• Identify the exemption - Reg A vs Reg D - and confirm who is responsible for disclosures.
• Ask how post-raise liquidity could work - OTC quoting, ATS listing, or company-led tender offers.
• If a finder is involved, document the role, fee, and limits.
• For 506(c), confirm how accredited verification will be handled and that the process aligns with the SEC's 2025 CDI guidance.
• Align allocation size with your overall risk budget and tax planning - many wins in private markets are undone by poor tax hygiene.

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