VIA: FourFourSeconds  The news is not good for seed investors.

According to a report published by Reuters, a new industry regulator in the US is set to limit the size of funds that can be managed by investors. 

“If the regulator adopts regulations that would restrict the size or types of funds investors can invest in, it would significantly restrict investment options for many investors,” Bloomberg reported. 

The rules would apply to seed funds that have not been publicly traded for more than one year and seed funds managed by non-US investors. 

 Bloomberg also reported that the US Securities and Exchange Commission has been examining whether it should restrict the amount of funds allowed to be invested by US investors.

“This rule would restrict seed investors’ ability to participate in the marketplace, which is critical to keeping up with technological advances in seed funding and the growth of other sectors,” the agency said in a statement. 

Seed investors have been in a pickle for some time, as the US has seen an explosion in the number of startups, the value of the stock market, and the number and quality of new seed funds.

The most recent data from the US Bureau of Labor Statistics (BLS) shows that the number has risen more than 9,000 percent over the past two years.

The US has more than 5.2 million seed-funded companies, but the growth rate has been slow, with only around 1,200 new startups being launched every month. 

On Monday, the US Senate passed legislation that would allow the SEC to impose limits on how many seed funds investors could invest in.

The bill, Senate Bill 5, would prevent the SEC from restricting the size, type, or investment in seed funds it deems too large, too small, or too uncertain.

“The SEC should not be imposing new regulation on seed funds because it has not done its job,” said Adam Bienenstock, co-founder of SeedFunds, a fund aimed at helping seed funds grow.

“What is needed is to provide investors with the ability to invest their money in seed fund companies, and not in unproven companies or the worst companies in the sector,” he added. 

Bienenstam said he was concerned that the proposed rules could lead to a drop in seed investors and make it harder for the country to keep pace with the rapid expansion of the financial sector.

“Investors who want to invest in seed companies should look to the industry that’s growing the most, which will be the industry of seed companies,” he said. 

Reuters reported that several US states, including California, Florida, New York, Ohio, and Texas, had introduced legislation this year to limit how much investors can get into seed funds, although none has gone to a vote yet. 

In March, the Senate passed a bill to allow US investors to buy a share in a seed fund, but only if it was a non-public company. 

That legislation, SB 1498, has since been amended, and is now awaiting approval by the US House of Representatives. 

It would allow investors to invest $50,000 in a single seed fund and then up to $500,000 more in the same fund.