A BDC, or Business Development Company, is a type of unregistered closed-end investment company in the United States that invests in small and mid-sized businesses. BDCs were created by the US Congress in 1980 to provide small and growing companies access to capital and to enable private equity funds to access public capital markets. To qualify as a BDC, a company must be registered in compliance with Section 54 of the Investment Company Act of 1940 and must be a domestic company whose class of securities is registered with the Securities and Exchange Commission (SEC) . BDCs invest in private companies and small public firms that have low trading volumes or are in financial distress. They raise capital through initial public offerings or by issuing corporate bonds and equities or forms of hybrid investment instruments to investors. BDCs are similar to venture capital (VC) or private equity (PE) funds since they provide investors with a way to invest in small companies and participate in the sale of those investments. However, VC and PE funds are often closed to all but wealthy investors, while BDCs allow anyone who purchases a share to participate in the open market. BDCs offer investors high dividend yields and some capital appreciation potential, but their heavy use of leverage and small or distressed company targeting makes them relatively high-risk investments. Some examples of publicly traded BDCs include KCAP Financial, Inc, Medley Capital Corp, PennantPark Investment Corp, and Prospect Capital Corp.