Business Development Companies


This practice note will provide a general overview of business development companies (BDCs), and will discuss, among other things, BDC investment criteria, operational considerations, management, and tax issues. Also referred to as “public venture capital funds,” “public mezzanine funds,” or “public private equity funds,” BDCs are regulated entities under the Investment Company Act of 1940, as amended (the Investment Company Act). A specific sub-type of closed-end investment company, BDCs usually make long-term private investments in small to middle-market companies and have gained popularity in recent years with the desire of many investors—particularly those who do not qualify as accredited investors or “qualified purchasers”—to gain access to private financings without satisfying the securities laws requirements that typically govern the qualifications of persons making private investments.