The U.S. Securities and Exchange Commission (SEC) annually hosts the Government-Business
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REPORT ON THE
small
business
42ND ANNUAL
FORUM
04.24.23 – 04.27.23
The U.S. Securities and Exchange Commission (SEC) annually hosts the Government-Business
Forum on Small Business Capital Formation. The recommendations contained in this report
were developed by the 2023 Forum participants. The recommendations are not endorsed by the
SEC and, as with the remarks of SEC Commissioners and staff published in this report, do not
necessarily reflect the views of the SEC, its Commissioners, or any of the SEC’s staff members.
Digital copies of the prior reports and other materials relating to previous Forums, dating back
to 1993, are available online.
CONTENTS
FORUM HIGHLIGHTS AND POLICY RECOMMENDATIONS.............................................. 5
Day 1: Exploring the Early-Stage Landscape
Capital Raising Trends and Strategies.................................................................... 5
Day 2: Building Entrepreneurial Ecosystems
Laying the Groundwork to Support
Small Businesses and Their Investors....................................................................12
Day 3: Investing in Small Businesses
Successes and Challenges Facing Smaller Funds........................................... 19
Day 4: Accessing the Public Markets
Becoming and Staying a Public Reporting Company.................................. 26
FORUM ADVISORY PLANNING GROUP..................................................................................32
SEC OFFICIALS’ REMARKS.......................................................................................................... 34
Sebastian Gomez Abero......................................................................................................... 34
Chair Gary Gensler.................................................................................................................... 36
Commissioner Hester M. Peirce........................................................................................... 38
Commissioner Caroline A. Crenshaw................................................................................40
Commissioner Mark T. Uyeda............................................................................................... 42
Commissioner Jaime Lizárraga...........................................................................................44
INTERAGENCY REMARKS............................................................................................................ 45
Karl Fooks, U.S. Department of the Treasury................................................................ 45
ABOUT THE OFFICE OF THE ADVOCATE
FOR SMALL BUSINESS CAPITAL FORMATION ................................................................. 48
DID YOU
KNOW?
61.7M
Americans are EMPLOYED BY A
SMALL BUSINESS (46.4% of U.S. employees)
75%
of entrepreneurs have experienced
CHALLENGES OBTAINING CAPITAL
PARTICIPANTS from ACROSS THE ECOSYSTEM
weighed in on issues facing small businesses
Investor
Founder Consultant
Accountant
Mentor
Business Leader
Advocacy/Trade Associate
Researcher
Community/Nonprofit Leader
Professional Adviser Student Entreprenuer
CDFI
Government
Attorney Academia
Compliance
ABOUT THE FORUM
The SEC’s annual Small Business Forum is a unique event where members of the public and
private sectors gather to provide feedback to improve capital-raising policy.1 The Forum
covers a broad range of issues affecting small businesses and their investors, from early-stage
entrepreneurial ventures to smaller public companies.
The SEC’s Office of the Advocate for Small Business Capital Formation leads the event, in
collaboration with each of the Commissioners and other offices and divisions across the agency.
Participants in the Forum bring a breadth of perspectives to the policy deliberations, approaching
capital raising from a variety of backgrounds, geographies, and life cycle stages.2
ENGAGING PUBLIC PARTICIPANTS ACROSS
THE SMALL BUSINESS ECOSYSTEM
Participants
45 U.S. States
and Territories
441 attendees
303 registrants identifying as a womenor minority-owned business or its investor
Engagement
40 tweets from
@SECgov
556k Twitter
impressions
1,291 total views across the 4-day,
6-hour event
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 1
PERSPECTIVES ON SMALL BUSINESS CAPITAL-RAISING
AT EVERY STAGE
The 42nd Small Business Forum took place over four 90-minute virtual sessions April 24-27,
featuring appearances by each of the Commissioners and 12 speakers with in-depth knowledge
of the issues facing small business across the country. Each session focused on a different stage of
the capital-raising lifecycle.
April
24
Exploring the Early-Stage Landscape:
Trends and Strategies in Capital Raising
April
25
Building Entrepreneurial Ecosystems:
Laying the Groundwork to Support
Small Businesses and Their Investors
April
26
Investing in Small Businesses:
Successes and Challenges Facing
Smaller Funds
April
27
Accessing the Public Markets:
Becoming and Staying a Public
Reporting Company
2 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
POLICY RECOMMENDATIONS
A hallmark of the Forum is the opportunity for participants to develop policy recommendations
to improve capital raising. Based on feedback from prior Forums, and consistent with prior
years’ events, we invited participants to submit recommendations in advance, as well as “chat”
them in during the live event. Doing so fostered an inclusive environment where all voices could
be heard while being efficient with participants’ time.
At the conclusion of each day’s panel discussion, participants prioritized the relevant
recommendations based on their perception of the positive impact it would have on capital
formation. This report includes the top five recommendations from each day.
Alongside each recommendation is a response from the Commission, noting any corresponding
policy initiatives that have been made public.3 The Commission will consider Forum
recommendations alongside other public comments for relevant policy initiatives.
18 hours of open polls
across 4 days
42 policy topics submitted
by the public
20 recommendations
prioritized for delivery to the
Commission and Congress
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 3
4 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
DAY 1: EXPLORING THE
EARLY-STAGE LANDSCAPE
Capital Raising Trends and Strategies
Agenda
1:00 P.M.
Welcome Remarks from Sebastian Gomez Abero, SEC Small Business
Advocacy Team
1:05 P.M.
Remarks from SEC Chair Gary Gensler
1:10 P.M.
Remarks from SEC Commissioner Hester M. Peirce
1:15 P.M.
Introduction by Amy Reischauer, SEC Small Business Advocacy Team
1:20 P.M.
Panel Discussion
Moderator: Julie Zelman Davis, SEC Small Business Advocacy Team
Panelists:
Jennifer Garcia, Latino American Business Action Network
Edna Martinson, Boddle Learning
Laura Simão, Lendistry Capital Partners
2:00 P.M.
Q&A with Panelists, moderated by Amy Reischauer, SEC Small Business
Advocacy Team
2:25 P.M.
Closing Remarks from Kim Dinwoodie, SEC Small Business
Advocacy Team
2:30 P.M.
Voting to Prioritize Policy Recommendation Submissions
WE ASKED. . .
PARTICIPANTS SAID. . .
How have
you raised
capital?
#1
ANGEL INVESTORS
(68% of respondents)
58% said Friends and Family and
48% said Grants, Loans, or Other Non-Dilutive Funding
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 5
Panel Speakers
JENNIFER GARCIA
Chief Operating Officer
Latino Business Action Network
San Francisco, CA
Angel investors play an important role that’s arguably
more important for diverse founders. If Latinos are a
reflection of my family, we don't have the tios and tias
– the aunts and uncles – that are going to fund me…
They don't have the sophisticated networks to introduce
them to the VC that's just going to write them [a] check
just because we went to the same school. We just don't
have that network. So angel investors really do play an
important role for these early-stage founders.
Jennifer is Chief Operating Officer for Latino Business Action Network (LBAN), a nonprofit
organization that promotes Latino entrepreneurship in the United States. Under her leadership,
LBAN facilitates the Business Scaling Program at Stanford University, building an ecosystem of
over 1,000 Latino and Latina mentors, capital providers, and corporate partners. In addition to her
role at LBAN, Jennifer founded Fluential Leadership, a company working with small-to-mediumsized businesses to develop and execute growth strategies. Prior to LBAN, Jennifer spent 12 years
at Bloomberg L.P., where she held numerous leadership positions, including managing the Asset
and Investment Management Product Specialist Team and the fixed income and foreign exchange
electronic trading teams. Jennifer is the Co-Author of Hispanic Stars Rising – The New Face of
Power, which showcases successful Latino leaders.
It's so easy for somebody to say, go read this
book and you'll know everything you need to
know about VC, but it's a lot harder when you're
in it, and you just wish somebody could look at
this term sheet and… explain line to line, but I
[didn’t] have money to hire a lawyer so that was
definitely a challenge. [I did] lots of Googling and
trying to talk to other founders.
EDNA MARTINSON
Co-Founder
Boddle Learning
Tulsa, OK
Edna launched Boddle Learning during the Covid-19 pandemic, and today the AI-enabled,
interactive, educational gaming platform has helped 4 million elementary-age students across
the U.S. tackle learning gaps and improve math proficiency. Boddle’s first investors are located in
the Midwest/Southwest, including venture funds focused on building technology companies in
America’s heartland. Edna emigrated from Ghana and was recently recognized in the Forbes 30
under 30 Class of 2023.
6 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
The key is really to look for
an ethical and responsible
capital provider that can stay
with you for the long run.
LAURA SIMÃO
Head of Lendistry Capital Partners and Public-Private Partnerships
Lendistry Capital Partners
New York, NY
Laura is a seasoned impact investor with over 15 years of experience. Most recently, she served
as a Vice President in the Urban Investment Group within Goldman Sachs Asset Management
and the head of the access to capital component of Goldman Sachs' 10,000 Small Businesses. A
recognized investor and thought leader, Laura has been tapped to advise senior government officials
at the federal, state, and local levels on creating strategies, policies and designing ecosystems that
leverage public and private sector resources to create opportunities and equitable access to capital
to entrepreneurs. She has led the design and execution of several public-private partnerships and
investment funds to support minority entrepreneurs, including in New York City and Chicago.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 7
Highlights from Panel Discussion
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VC isn’t right for every company and there’s a wide spectrum of capital options. It’s
important to really think about the right type of capital for your business model. When
you’re an early-stage entrepreneur, there’s more than one way to define success in terms
of fundraising.
There’s a tightening in capital, and diverse founders will experience it the most. As micro
funds and emerging funds managers experience challenges with second funds, it affects
minority communities.
We’re living through a unique period of time and public-private initiatives, including with
the State Small Business Credit Initiative program.
Navigating the fundraising world is challenging. There is significant value in having someone
to translate terminology and resources to help.
Access to capital hinges on access, including access to people who understand all the pieces.
How do we connect capital providers and VCs and business owners? How do organization
leaders, founders and business owners extend access to each other?
Minority founders don’t have the same level of access to friends and family with the ability
to write large checks, so angel investors really do play an important role for early-stage
founders. When markets tighten, Angels play an important role because they continue to
back new founders.
Investors tend to invest in people and products they identify with, so policies based on
wealth have an impact on which entrepreneurs receive capital. It’s important to understand
the impact the ability to qualify as an accredited investor has on diverse founders. It’s also
important to think about those that want to be investors – investing in early-stage companies
that you believe in is a major source of wealth generation.
Participants' Policy Recommendations
Expand the accredited investor definition to achieve greater
diversity among startup investors and entrepreneurs
COMMISSION RESPONSE
As indicated on the Spring 2023 Regulatory Agenda,4 the Division of Corporation Finance is
considering recommending that the Commission propose amendments to Regulation D, including
updates to the accredited investor definition, to improve protections for investors. The Commission
will consider this Forum recommendation in connection with this initiative.
8 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Expand the accredited investor definition to include additional
measures of sophistication
COMMISSION RESPONSE
In 2020, the Commission adopted amendments to the definition of “accredited investor” under
Regulation D of the Securities Act of 1933 (Securities Act) that added ways for individuals to
qualify as accredited investors and participate in private offerings (Accredited Investor Adopting
Release).5 This included amendments allowing natural persons to qualify as accredited investors
based on certain professional certifications, designations, or credentials. The amended rule
includes a nonexclusive list of attributes that the Commission will consider in determining which
professional certifications and designations or other credentials qualify a natural person for
accredited investor status. In a related order, the Commission designated holders in good standing
of the Series 7 (Licensed General Securities Representative), Series 65 (Licensed Investment Adviser
Representative), and Series 82 (Licensed Private Securities Offerings Representative) licenses
as accredited investors.6 The Commission may designate additional qualifying professional
certifications, designations, and other credentials by order.
The Spring 2023 Regulatory Agenda indicates that the Division of Corporation Finance is
considering recommending that the Commission propose amendments to Regulation D, including
updates to the accredited investor definition, to improve protections for investors. The Commission
will consider this Forum recommendation in connection with this initiative.
Harmonize the annual reporting requirements for issuers that utilize
different exempt pathways, such as Regulation Crowdfunding and
Regulation A
COMMISSION RESPONSE
The Commission regularly evaluates ways to improve its capital raising rules. In 2020, the
Commission adopted amendments to Regulation Crowdfunding and Regulation A designed to
improve the workability of those exemptions in order to allow for efficient capital raising by issuers
while continuing to provide important investor protections.7 The Commission will consider this
Forum recommendation as well as the effects of the recent rule amendments in connection with its
regulatory initiatives, consistent with relevant statutes.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 9
Expand the accredited investor definition to include any person
who invests not more than 10% of the greater of his/her annual
income or net assets
COMMISSION RESPONSE
The Spring 2023 Regulatory Agenda indicates that the Division of Corporation Finance is
considering recommending that the Commission propose amendments to Regulation D, including
updates to the accredited investor definition, to improve protections for investors. The Commission
will consider this Forum recommendation in connection with this initiative.
Do not revise the accredited investor definition to make it more
difficult to qualify based on wealth thresholds
COMMISSION RESPONSE
The Spring 2023 Regulatory Agenda indicates that the Division of Corporation Finance is
considering recommending that the Commission propose amendments to Regulation D, including
updates to the accredited investor definition, to improve protections for investors. The Commission
will consider this Forum recommendation in connection with this initiative.
10 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 11
DAY 2: BUILDING ENTREPRENEURIAL
ECOSYSTEMS
Laying the Groundwork to Support Small Businesses
and Their Investors
Agenda
1:00 P.M.
Welcome Remarks from John Cavanagh, SEC Small Business
Advocacy Team
1:05 P.M.
Remarks from SEC Commissioner Caroline A. Crenshaw
1:10 P.M.
Introduction by Sebastian Gomez Abero, SEC Small Business
Advocacy Team
1:15 P.M.
Panel Discussion
Moderator: Courtney Haseley, SEC Small Business Advocacy Team
Panelists:
Betty Francisco, Boston Impact Initiative
Ian Hathaway, Far Out Ventures
Brian Hollins, Collide Capital
2:00 P.M.
Q&A with Panelists, moderated by Sebastian Gomez Abero,
SEC Small Business Advocacy Team
2:25 P.M.
Closing Remarks from Sarah Kenyon, SEC Small Business
Advocacy Team
2:30 P.M.
Voting to Prioritize Policy Recommendation Submissions
WE ASKED. . .
What are
the biggest
barriers to
access
capital?
PARTICIPANTS SAID. . .
#1 Connections to
NETWORKS
and Investors
Information, Education and Knowledge
and Laws, Policies, and Regulations
were the next biggest barriers
12 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Panel Speakers
BETTY FRANCISCO
Chief Executive Officer
Boston Impact Initiative
Boston, MA
Surround yourself with a
community – a community
of support, a community
you value, a community
that you want to help
bolster – and amplify it.
Betty is CEO of Boston Impact Initiative, a social impact investment fund investing to close the
racial wealth divide in New England. She is also co-founder of Amplify Latinx – a social venture
working to build Latinx economic and political power in Massachusetts. Named one of the 100
Most Influential People in Boston last year by Boston Magazine, Betty serves on the Board of
Directors of Beth Israel Lahey Health, Nellie Mae Education Foundation, The Boston Foundation,
and Roxbury Community College.
Build relationships as early
as possible. Instead of dots,
[investors] want to see lines.
IAN HATHAWAY
Co-Founder and General Partner
Far Out Ventures
Santa Barbara, CA
Ian is Co-Founder and General Partner of Far Out Ventures, a pre-seed and seed stage investor
in marketplace, vertical SaaS, and fintech companies. Previously, he was Senior Vice President
at Techstars, where he led the firm’s investment strategy and fund analytics, and launched the
Techstars pre-accelerator program. Ian has been an advisor to leaders in technology, finance, and
venture, including Index Ventures, Google, and Goldman Sachs. He is also co-author of the Startup
Community Way, a book about entrepreneurial ecosystems.
13 | REPORT OF THEREPORT
42ND ANNUAL
OF THE SEC
42NDSMALL
ANNUAL
BUSINESS
SEC SMALL
FORUM
BUSINESS FORUM | 13
BRIAN HOLLINS
Founder and Managing Partner
Collide Capital
Brooklyn, NY
[T]he best ecosystems are fostered by
a pure desire to help others win. It sets
a culture and a precedent from the
jump that leads to a beautiful flywheel
of folks having a genuine interest in
supporting the greater cause.
Brian is Founder and Managing Partner of Collide Capital, a venture firm investing in a diverse
array of founding teams. He is also Founder and CEO of Takeoff Institute, a non-profit equipping
Black undergrads with the necessary resources to launch a successful career, and is a Founding
Board Member of BLCK VC, an investor ecosystem for Black investors looking to make a career
in venture. Previously, Brian worked at Goldman Sachs where he helped launch the Emerging
Entrepreneurs Coverage group to extend resources and capital to early-stage founders and deploy
over $100 million of capital as a software investor for GS Growth Equity.
14 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Highlights from Panel Discussion
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While successful entrepreneurial ecosystems share many tangible and intangible ingredients,
each ecosystem is unique and depends on the kind of startup community that exists within
it. Importantly, cultural capital differs from one community to another, and ecosystems
require more than financial capital to grow.
It is critical that ecosystems are adaptable and acknowledge the interdependence of different
stakeholders. Coalition-building and intentional outreach are vital, as are conscious efforts
to build bridges among various capital allocators and other actors within the community,
while recognizing the different niches such actors fill in supporting and collaborating with
startups.
When individuals are intentional about building and identifying cultures and communities
that they care about, the benefits are more bountiful to both the individual and the entire
entrepreneurial ecosystem. Giving freely first, with a long-term lens of commitment to a
community, is an approach that benefits everyone in the ecosystem.
It remains more difficult for emerging fund managers of color to raise money than fund
managers from traditional backgrounds, which continues to create frictions for the flow of
capital into the ecosystems that support underrepresented founders.
Funneling capital into companies in underrepresented communities remains a challenge,
and we need more diverse fund managers who come from the communities we are trying to
reach. Diversifying the capital allocators is critical to collaborating with the diverse startups
in need of support and is instrumental in driving investment into diverse led companies.
Participants' Policy Recommendations
Ensure capital-raising rules provide equitable access to capital for
underrepresented founders and investors
COMMISSION RESPONSE
Fair and efficient capital markets are important to protecting underrepresented founders and
investors. To that end, the Commission regularly evaluates ways to improve its capital raising
rules, and the Spring 2023 Regulatory Agenda includes an initiative to consider amendments to
Regulation D, the most frequently used of the Commission’s rules related to exempt offerings.
As always, the Commission will carefully balance concerns relating to the impact on companies
participating in the U.S. capital markets (including those led by underrepresented founders) with
all of our statutory mandates including investor protection, and weigh the public comments to
achieve the appropriate balance. Ensuring investor confidence in capital markets and disclosure
is a crucial ingredient in capital formation, including capital formation for small business and
underrepresented entrepreneurs. The Commission will consider this Forum recommendation in
connection with its regulatory initiatives.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 15
Collaborate with market experts to establish a regulatory framework
for finders that includes an exemption from broker-dealer
registration and helps facilitate small business capital formation
COMMISSION RESPONSE
In October 2020, the Commission proposed an exemptive order that would permit natural persons
to engage in certain limited activities involving accredited investors without registering with the
Commission as a broker-dealer.8 In connection with that proposal, the Commission requested public
comment on all aspects of the proposed exemption. Finalizing the proposal is not included in the
Spring 2023 Regulatory Agenda.9
Support entrepreneurs, including underrepresented
founders, who lack the technical assistance to understand
how to access capital from investors
COMMISSION RESPONSE
The Commission supports efforts to provide and improve accessibility of educational and technical
resources to support entrepreneurs and their investors. In 2021, the SEC’s Office of the Advocate for
Small Business Capital Formation, in partnership with other SEC offices and divisions, launched a
new Capital Raising Hub10 on sec.gov that serves as a centralized portal for educational resources
for entrepreneurs and their investors on how to comply with securities laws when raising capital.
Resources are tailored to be accessible for various levels of familiarity with capital raising rules
and regulations, from very early entrants to the capital raising framework to more experienced
users seeking guidance on specific rules. The Capital Raising Hub is directly accessible under the
“Education” tab on the SEC’s homepage and is continuously expanded in response to feedback from
small businesses and their investors. The Capital Raising Hub has received over 84,000 visits since its
launch and includes:
• Cutting Through the Jargon11 glossary of key terms that makes the language of capital
raising more accessible to small businesses and their investors.
• Navigate Your Options12 interactive tool that explores regulatory pathways available to
raise capital, through which users answer a series of questions to identify the most relevant
pathways to raise capital based on their specific needs.
• Capital Trends Maps13 that provide data on where capital is being raised across the country
under various offering pathways.
• Building Blocks14 that provide a suite of educational materials that break down
fundamental securities law concepts into plain language.
The SEC’s Office of the Advocate for Small Business Capital Formation, in partnership with other
SEC offices and divisions, has engaged with small businesses, investors, and thought leaders in the
market to highlight these new educational resources, and will continue to seek engagements with
diverse audiences across the country. The Commission welcomes continued engagement and ideas to
improve the resources.
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Improve the exempt offering framework to reduce concentration
and increase diversity – access to capital should not be practically
limited to only rich people the company knows
COMMISSION RESPONSE
The Commission regularly evaluates ways to expand and diversify access to capital. In 2020,
the Commission adopted a set of rule amendments designed to facilitate capital formation and
increase opportunities for investors by expanding access to capital for small and medium-sized
businesses and entrepreneurs across the United States.15 This included amendments to improve
certain exemptions from registration that allow for investment by non-accredited investors, such as
Regulation A and Regulation Crowdfunding. The Commission in 2020 also adopted amendments
to the accredited investor definition that added additional ways for individuals to qualify as
accredited investors and participate in exempt offerings.16 The Division of Corporation Finance
staff welcomes additional data on the effect of these amendments, including on investor protection.
In addition, the Commission welcomes ideas for how our federal securities laws can support
entrepreneurial ecosystems across the country while maintaining investor protection. In connection
with any such recommendations, the Division of Corporation Finance staff is interested in any
additional data on how any potential rule changes arising therefrom would affect the risks to
different investors.
The Spring 2023 Regulatory Agenda indicates that the Division of Corporation Finance is
considering recommending that the Commission propose amendments to Regulation D, including
updates to the accredited investor definition, to improve protections for investors. The Commission
will consider this Forum recommendation in connection with its regulatory initiatives.
Create a new private fund exemption to allow states to foster
intrastate and regional funds focused on community-based investing
that is open to non-accredited investors
COMMISSION RESPONSE
The Commission regularly evaluates ways to expand and diversify access to capital, including
through private funds. Further, the Commission supports collaboration among the SEC’s Division
of Investment Management, Division of Corporation Finance, and Office of the Advocate for
Small Business Capital Formation to explore ways to enhance community-based investing. The
Commission and staff will consider this Forum recommendation in connection with these efforts.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 17
18 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
DAY 3: INVESTING IN SMALL BUSINESSES
Successes and Challenges Facing Smaller Funds
Agenda
1:00 p.m.
Welcome Remarks from Courtney Haseley, SEC Small Business
Advocacy Team
1:05 p.m.
Remarks from SEC Commissioner Mark T. Uyeda
1:10 p.m.
Overview of SSBCI Equity/Venture Capital Program from Karl Fooks,
Outreach Manger and SME for VC Programs, U.S. Department of the Treasury
1:15 p.m.
Introduction by Julie Zelman Davis, SEC Small Business Advocacy Team
1:20 p.m.
Panel Discussion
Moderator: John Cavanagh, SEC Small Business Advocacy Team
Panelists:
Rita Astoor, Carta
Jay Bockhaus, Center on Rural Innovation's Innovation Funds
Dana Guthrie, Gateway Capital Partners
2:00 p.m.
Q&A with Panelists, moderated by Julie Zelman Davis, SEC Small
Business Advocacy Team
2:25 p.m.
Closing Remarks from Elizabeth Sukut, SEC Small Business
Advocacy Team
2:30 p.m.
Voting to Prioritize Policy Recommendation Submissions
WE ASKED. . .
What are the
greatest challenges
facing smaller
fund managers?
PARTICIPANTS SAID. . .
#1 Access to a
NETWORK
of Investors
Regulatory Barriers to Entry
and Lack of Track Record
were the next greatest challenges
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 19
Panel Speakers
RITA ASTOOR
There are so many overlapping rules that fit together like a
puzzle to support emerging managers entering this space,
I think making it as easy as possible for them to understand
exactly what they need to do to comply and be able to get
off the ground is going to continue to be so important.
Head of Venture Capital Business Development and Product Advisor
Carta Initiative
San Francisco, CA
Rita is Head of Venture Capital Business Development and a Product Advisor at Carta. She leads the
business development strategy and operations for Carta’s investment management products, engaging
with law firms, tax and audit providers, banks, asset managers, and other partners across the venture
ecosystem. She also works with the product team to help solve client and industry needs. Prior to
joining Carta, Rita was an investment funds associate at law firms Latham & Watkins LLP and
Norton Rose Fulbright US, LLP. Rita is also a Lecturer at UC Berkeley School of Law.
There is no shortage of great ideas
coming out of small communities
in the United States, but there is an
opportunity gap in terms of capital
and resources available to develop
those ideas into scalable startups.
JAY BOCKHAUS
Managing Partner
Center on Rural Innovation’s Innovation Funds
Westport, CT
Jay is Managing Partner of the Center on Rural Innovation’s Innovation Funds, which invest in
growth businesses located across rural communities in the United States. Prior to joining the Center
on Rural Innovation, Jay served as Executive Advisor to the Chairman at Emigrant Bank and led
investments in several small growth businesses. He has over 20 years of investment and management
experience in media, sports, and banking industries. Jay also serves as the Treasurer for Venture for
America, through which he actively mentors entrepreneurs building startups across the country.
20 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Financial returns and social
returns aren't mutually exclusive.
DANA A. GUTHRIE
Managing Partner
Gateway Capital Partners
Milwaukee, WI
Dana is Managing Partner at Gateway Capital, a venture capital firm focused on Wisconsinbased, early-stage startups. Prior to her current role, Dana founded and managed Alchemy Angel
Investors, an angel investment network. She founded Alchemy while being employed full-time at a
Fortune 500 company and managing a multi-million dollar, global product offering. Dana is also a
two-time patent recipient.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 21
Highlights from Panel Discussion
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The capital raising environment—in particular, the amount of investment into private
companies and corresponding valuations—has deteriorated markedly over the past year.
Fewer emerging managers are raising funds, and for those that are, the fundraising period is
growing longer and yielding smaller fund sizes.
Institutional limited partners are concentrating new allocations in more established
managers and the family offices and high net worth individuals upon whom emerging
managers often rely for funding, are not receiving sufficient returns from existing
investments that they are able to then reinvest.
Given current market conditions, emerging managers with fundraising already secured have
opportunities to make investments at attractive valuations.
Investment opportunities in portfolio companies located outside traditional hubs (e.g.,
Silicon Valley, New York, Boston) are becoming more attractive, given lower operating
expenses, lower costs of living and the entrenchment of remote working arrangements.
Significant success stories help draw attention to venture capital opportunities available in
“flyover” states.
Diversity in fund management leads to diversity in investments.
Policy tweaks, along with educational initiatives related to applicable regulation, can greatly
support emerging managers.
Participants' Policy Recommendations
Support underrepresented emerging fund managers—specifically
minorities and women—building funds that diversify capital allocation,
engage sophisticated investors, and challenge pattern matching trends
COMMISSION RESPONSE
The Commission supports efforts to improve diversity among fund managers and entrepreneurs
who raise capital. As described above, in 2021, the SEC’s Office of the Advocate for Small Business
Capital Formation, in partnership with other SEC offices and divisions, launched and continues
to update and expand the Capital Raising Hub on sec.gov that serves as a centralized portal for
several educational resources to support entrepreneurs and their investors, including content to help
support underrepresented emerging fund managers, their investors, and their portfolio companies.17
In addition, the SEC’s Office of the Investor Advocate has sought to engage with diverse
communities, including investors from historically underserved, rural, or Native American
communities, veterans, and investors with disabilities.18 The Office of the Investor Advocate has
also actively sought to include the voices of minority and underserved investors including by
holding events designed to obtain their feedback on policy-related topics.19 The Commission will
consider this Forum recommendation in connection with these and other initiatives.
22 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Allow non-accredited investors to participate in venture capital funds
COMMISSION RESPONSE
The Commission regularly evaluates ways to expand and diversify access to capital, consistent with
investor protections including through private funds. The Commission has previously sought public
comment on whether retail investors should be allowed greater exposure to growth-stage issuers
through pooled investment funds in light of the potential advantages of investing through such
funds, including the ability to have an interest in a diversified portfolio.20
As described above, in 2020, the Commission adopted a set of rule amendments designed to
facilitate capital formation and increase opportunities for investors by expanding access to capital
for small and medium-sized businesses and entrepreneurs across the United States.21 This included
amendments to improve certain exemptions from registration that allow for investment by
non-accredited investors, such as Regulation A and Regulation Crowdfunding. Furthermore in
2020, the Commission also adopted amendments to the definition of “accredited investor”
under Regulation D of the Securities Act that added ways for individuals to qualify as accredited
investors and participate in private offerings.22 These amendments allow investors to qualify
as accredited investors based on defined measures of professional knowledge, experience, or
certifications in addition to the existing tests for income or net worth, and were intended to more
effectively identify individual (and institutional) investors that have the knowledge and expertise
to participate in these markets. The Commission will consider this recommendation in connection
with its regulatory initiatives.
Increase the number of investors allowed in 3(c)(1) funds (private
funds structured in the traditional manner under Section 3(c)(1) of the
Company Act above 100 investors
COMMISSION RESPONSE
A 3(c)(1) fund is a type of pooled investment vehicle that is excluded from the definition of
“investment company” under the Investment Company Act of 1940 (Company Act) because it has
no more than 100 beneficial owners and otherwise meets criteria outlined in Section 3(c)(1) of the
Company Act. 3(c)(1) funds are often used by venture capital firms and other early-stage investors
who pool capital for investment in startups.
Any amendments to Section 3(c)(1) to change the number of investors allowed would require
Congressional action.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 23
Increase the number of investors and the capital limit for funds
structured under Section 3(c)(1), including traditional 3(c)(1) funds as
well as Qualified Venture Capital Funds to achieve greater diversity
among startup investors and entrepreneurs
COMMISSION RESPONSE
As noted above, a 3(c)(1) fund is a type of pooled investment vehicle that is excluded from the
definition of “investment company” under the Company Act because it has no more than 100
beneficial owners and otherwise meets criteria outlined in Section 3(c)(1) of the Company Act.
A “qualifying venture capital fund” is a type of private fund that is excluded from the definition of
“investment company” under Section 3(c)(1) of the Company Act because it:
1. has not more than 250 beneficial owners;
2. has not more than $10 million in aggregate capital contributions and uncalled capital
commitments; and
3. qualifies as a venture capital fund.
Any amendments to Section 3(c)(1) to change the number of investors allowed or the $10 million
cap23 would require Congressional action.
Incentivize investors to invest in funds that support startup founders
COMMISSION RESPONSE
One prong of the Commission’s mission is to facilitate capital formation. In 2021 the SEC’s Office
of the Advocate for Small Business Capital Formation, in partnership with other SEC offices and
divisions, launched and continues to update and expand the Capital Raising Hub on sec.gov.
The Hub serves as a centralized portal for several educational resources to support entrepreneurs
and their investors. It includes content to help support emerging fund managers, their investors,
and their portfolio companies.24 The Commission will consider this Forum recommendation in
connection with this and other initiatives.
24 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 25
DAY 4: ACCESSING THE PUBLIC MARKETS
Becoming and Staying a Public Reporting Company
Agenda
1:00 P.M.
Welcome Remarks from Dave Gessert, SEC Small Business
Advocacy Team
1:05 P.M.
Remarks from SEC Commissioner Jaime Lizárraga
1:15 P.M.
Introduction by Jenny Riegel, SEC Small Business Advocacy Team
1:20 P.M.
Panel Discussion
Moderator: Jenny Choi, SEC Small Business Advocacy Team
Panelists:
Kristen Grippi, Evercore
Hillary Holmes, Gibson, Dunn & Crutcher
Tim Hwang, FiscalNote
2:00 P.M.
Q&A with Panelists, moderated by Jenny Riegel, SEC Small Business
Advocacy Team
2:15 P.M.
Closing Remarks from Sebastian Gomez Abero, SEC Small Business
Advocacy Team
2:30 P.M.
Voting to Prioritize Policy Recommendation Submissions
WE ASKED. . .
What are the
greatest
challenges
facing smaller
public
companies
seeking
capital?
PARTICIPANTS SAID. . .
#1 Burden of
REPORTING
Requirements
Cost of Compliance and Trading Volume
were the next greatest challenges
26 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Panel Speakers
There are many great companies, but not all of
them make great stocks. In an IPO, you need to sell
your company as a stock, and there are specific
metrics and stories that investors look for.
KRISTEN GRIPPI
Senior Managing Director
Evercore
New York, NY
Kristen is Senior Managing Director and Head of Equity Capital Markets at Evercore, where
she leads the team responsible for sourcing, structuring, and marketing IPOs, private placements,
follow-ons, and convertible offerings for clients across all industry sectors. Previously, Kristen
led the Industrials Equity Capital Markets Group and Equity Syndicate at Goldman Sachs. Prior
to covering industrials clients, Kristen worked with companies in the financial institutions and
financial technology sectors for nearly 10 years. With 23 years of experience working in Equity
Capital Markets and Growth Capital, Kristen has advised on over 500 bookrun transactions,
including IPOs and follow-on offerings.
For companies thinking of going public
someday, my advice is to start acting like a
public company as much as possible. That will
give you the best optionality to execute when
the markets are there or when you’re ready,
whether it’s now or it’s four years from now.
HILLARY HOLMES
Partner
Gibson, Dunn & Crutcher
Houston, TX
Hillary is a partner in the Houston office of Gibson, Dunn & Crutcher, Co-Chair of the firm’s
Capital Markets practice group, and a member of the firm’s Securities Regulation and Corporate
Governance, Energy, M&A, and ESG practice groups. Her practice focuses on capital markets,
securities regulation, and corporate governance. Hillary represents issuers and underwriters in
many forms of capital raising transactions, including IPOs, registered offerings of debt or equity,
private placements, joint ventures, structured investments, and sustainable financings. Hillary has
received recognition as a leading capital markets lawyer and dealmaker in the United States, having
led complex transactions and capital raising strategies for companies of all sizes.
27 | REPORT OF THE
REPORT
42ND ANNUAL
OF THE 42ND
SEC SMALL
ANNUAL
BUSINESS
SEC SMALL
FORUM
BUSINESS FORUM | 27
TIM HWANG
Chairman, CEO, and Co-Founder
FiscalNote
New York, NY
The process of going public is just
the beginning of a new journey, as we
accelerate our efforts to help companies
and organizations around the world turn
insights into action and leverage the
resources of the public markets to enter
our next phase of growth.
Tim is Chairman, CEO, and Co-Founder of FiscalNote, a global technology and media company
that delivers policy news in an evolving world. While at FiscalNote, Tim has raised more than $230
million in venture capital and acquisition financing. Tim served on the Montgomery County Board
of Education, where he oversaw a $4B budget and 22,000 public employees. Profiled in numerous
national publications, including Forbes 30 Under 30 and Business Insider’s Top 25 Hottest Startups,
Tim also serves as a World Economic Forum Technology Pioneer, and as a trustee or board member
for several regional and national non-profit organizations.
28 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Highlights from Panel Discussion
»
»
»
»
»
»
»
»
Going public is a time- and resource-consuming process, and companies need to evaluate
whether it is the right pathway for them.
Companies that successfully go public prepare for the process well in advance and focus
on determining whether it aligns with their business strategy. In advance of an IPO, taking
proactive steps to function like a public company, including having the right staff to properly
forecast and close quarters in a timely fashion, develop proper controls, maintain good
records, and invest in good governance, can serve companies well in the long run.
The benefits of IPOs can include higher valuation, the ability to raise additional capital,
broader investor base, and the ability to attract better talent.
Depending on market conditions, investors may favor growth potential over profitability
when investing in newly public companies.
One challenge that smaller companies face at the IPO phase is a lower materiality threshold
due to their small size, which can have an impact on various aspects of the company, including
disclosure, risk and liability management, and financial statement requirements for their
acquisitions.
As smaller companies tend to face liquidity and research coverage challenges, it is important
that they proactively seek out research analysts and reputable investors in their sector in
advance of the IPO to understand what investors look for. Having more research analysts that
cover your company can lead to more liquidity, which is why it’s important to set up a goal of
courting good analysts by offering to do events like non-deal roadshows with them or present
at their conferences to increase your company’s visibility.
Liquidity and trading volume challenges may lead smaller companies to get more creative
with capital-raising, including looking at preferred securities, PIPEs, and convertible
securities, which can be more complex and require more resources to navigate the applicable
regulations.
Due to the liquidity and trading volume challenges, smaller companies face trouble with
attracting investors that need to invest certain amounts without affecting the stock price.
Participants' Policy Recommendations
Revise Exchange Act Section 12(g) to increase the number of holders
that are non-accredited investors and increase the asset threshold
COMMISSION RESPONSE
The Spring 2023 Regulatory Agenda indicates that the Division of Corporation Finance is
considering recommending that the Commission propose amendments to the “held of record”
definition for purposes of Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act). The
Commission will consider this Forum recommendation in connection with any such release and any
other relevant initiatives.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 29
Before considering any changes that increase the smaller public
company requirements, narrowly tie any changes to an identified
problem so smaller public companies can have a stable and
predictable regulatory environment
COMMISSION RESPONSE
Over the years, the Commission has sought to promote capital formation and reduce compliance
costs for smaller public companies while maintaining investor protections. This includes a longstanding practice of providing scaled disclosure and other accommodations for these smaller
companies, and careful consideration of any potential disproportionate effects of new rule
requirements on such companies. Consistent with this practice, the Commission will consider this
Forum recommendation in connection with ongoing regulatory initiatives.
Facilitate the creation of venture markets that provide investors
with a transparent and regulated environment for trading in
stocks of smaller companies
COMMISSION RESPONSE
The Commission has heard from issuers, exchanges, and other market participants that a one-sizefits-all approach to market structure does not work for many public issuers, particularly small and
medium sized companies. To accommodate a venture market for smaller public companies, the
Commission issued a statement on market structure innovation that invited exchanges and other
market participants to submit proposals designed to improve the secondary market structure for
exchange-listed equity securities that trade in lower volumes, commonly referred to as “thinlytraded securities,”25 which are often also smaller-capitalization securities.
Low trading volumes may drive higher transaction costs for investors, present challenges for
investors seeking to establish or unwind meaningful positions, and negatively impact issuers’
cost of capital. The Commission asked for proposals to address these issues by improving the
secondary market structure for thinly-traded securities. The Commission’s statement lays out
various considerations that may be helpful for a proposal to address, including whether and
under what circumstances it would be appropriate to suspend unlisted trading privileges on
multiple exchanges and whether exemptive relief from Regulation NMS and other rules under
the Exchange Act would improve trading and liquidity. The Commission asked for proposals
to enhance trading and liquidity for this segment of the market while maintaining or improving
market integrity. The Commission will consider this Forum recommendation and consult, as
needed, with relevant stakeholders.
30 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Revise the proposed 2022 Climate-Related Disclosure rules to exempt
smaller reporting companies, non-accelerated filers, emerging growth
companies, and other midsized companies. If any of these issuers are
subject to the rules, scale and delay the rules
COMMISSION RESPONSE
On March 21, 2022, the Commission proposed rules to enhance and standardize climate-related
disclosures for investors.26 The proposed amendments include certain disclosure accommodations,
including an exemption from Scope 3 emissions disclosure requirements for smaller reporting
companies and a longer transition period to comply with the proposed rules for smaller reporting
companies. The Commission received almost 15,000 comment letters in response to the proposal,
including over 4,000 unique comment letters. The Commission will consider these comments and
this Forum recommendation in connection with these proposed rules.
Improve public trading for small companies by requiring more
disclosures about short selling, institutional holdings, insider and
affiliate holdings and transactions, paid stock promotion, and
information about the security from transfer agents
COMMISSION RESPONSE
In connection with short sale disclosure, self-regulatory organizations, including NYSE, Nasdaq,
and FINRA, currently provide short selling information on their websites, and the Commission
currently provides information on failures to deliver securities that may result from sales, including
short sales. On February 25, 2022, the Commission proposed a new rule and related form designed
to provide greater transparency through the publication of short sale-related data to investors and
other market participants.27 Under the rule, institutional investment managers that meet or exceed
a specified reporting threshold would be required to report, on a monthly basis using the proposed
form, specified short position data and short activity data for equity securities. The Commission
will continue to consider the comments received and this Forum recommendation in connection
with this initiative.
The Commission currently has rules regarding the disclosure of insider and affiliate holdings and
transactions, and the federal securities laws require persons who promote a security to fully disclose
the receipt and amount of consideration from an issuer, underwriter or dealer. The Commission
will consider this Forum recommendation in connection with ongoing regulatory initiatives.
In 2015, the Commission published an Advance Notice of Proposed Rulemaking and Concept
Release outlining various issues related to the transfer agent regulatory regime and potential
rulemaking to address those issues.28 The Commission will continue to consider the comments
received and this Forum recommendation in connection with this initiative.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 31
FORUM ADVISORY PLANNING GROUP
The SEC’s Small Business Advocacy team convened a Forum Advisory Planning Group to
provide strategic input on the Forum.29 Members brought additional perspectives to the Forum
planning process, weighing in on improvement opportunities from prior Forums, identifying
emerging issues impacting access to capital, highlighting potential speakers, and promoting the
event within their networks.
Government & Regulatory Representatives
William M. Beatty
Securities Administrator of the Washington
State Securities Division
National Association of State Securities
Administrators
Emily Wavering Corcoran
Manager, Federal Small Business
Credit Survey
U.S. Federal Reserve System
Gregory J. Dean, Jr.
Senior Vice President, Office of
Government Affairs
FINRA
Karl Fooks
Outreach Manager, Office of Domestic
Finance
U.S. Department of Treasury
Amit Patel
Capital Readiness Program Director
Minority Business Development Agency
U.S. Department of Commerce
Eric Smith
Director, Office of Innovation and
Entrepreneurship
U.S. Economic Development Administration
Bailey DeVries
Associate Administrator, Office of
Innovation & Technology
U.S. Small Business Administration
Business & Professional Organization Representatives
Faith Bautista
President & Chief Executive Officer
National Diversity Council
Patrick Gouhin
Chief Executive Officer
Angel Capital Association
Charles Crain
Director, Tax & Domestic Economic Policy
National Association of Manufacturers
Chidima Okorie
Program Officer
BLCK VC
Derrick Foust
Founder Experience Manager
StartOut
Brett T. Palmer
President
Small Business Investor Alliance
32 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Carlo Passeri
Director Capital Markets and Financial
Services Policy
Biotechnology Innovation Organization
Maxwell R. Rich
Deputy General Counsel, VP of Regulatory
Affairs, Secretary
Open Deal Inc., dba Republic
Charlotte Savercool
Senior Director
National Venture Capital Association
Evan Williams
Director, Center for Capital Markets
Competitiveness
US Chamber of Commerce
Bonnie J. Roe
Chair of the Small Business Issuers
Subcommittee, Business Law, Section's
Committee on Federal Regulation of Securities
American Bar Association
Non-Profit and Academia
Katie Allen
Senior Vice President
Center for American Entrepreneurship
Rodney Sampson
Executive Chairman and CEO
Opportunity Hub and OHUB Foundation
Victor Hwang
Founder and CEO
Right to Start
Jennifer J. Schulp
Director of Financial Regulation Studies,
Center for Monetary and Financial Alternatives
Cato Institute
Joe Kapp
Founder
RuralRISE
Prior Forum Participants
Victor Gutwein
Managing Partner
M25
Jordan Walker
Co-Founder
Yac
Vanessa Roanhorse
CEO and Portfolio Lead
Roanhorse Consulting
Greg Yadley
Partner
Shumaker, Loop & Kendrick, LLP
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 33
SEC OFFICIALS’ REMARKS
Opening Remarks
SEBASTIAN GOMEZ ABERO
Hello and welcome to the SEC’s 42nd annual Small Business Forum.
My name is Sebastian Gomez, and I am part of the SEC’s Small
Business Advocacy team. I am so glad you are joining us this week.
This long-standing SEC event brings together small businesses, their
investors, advisors, and others who care deeply about the importance
of small businesses to innovation and our economy. Among those
registered, more than one-third identified as founders, entrepreneurs,
and business leaders, while another one-third identified themselves as
investors. Among them over 20% are individuals who own or invest
in women-owned businesses, more than 25% are individuals who own or invest in minorityowned businesses, and more than 15% are individuals who own or invest in businesses located in
rural areas.
Over the next four days, you will hear from thought leaders with in-depth knowledge of the
issues facing small businesses and their investors.
•
•
•
•
Today we will focus on the landscape for early-stage companies, including trends and
strategies in capital raising.
Tomorrow we will hear about building vibrant entrepreneurial ecosystems to support
entrepreneurs and their investors.
Wednesday we will turn to the successes and challenges facing smaller funds that play
such an important role investing in a wide array of small business.
Thursday, we will close the Forum with a focus on the public markets with a conversation
about becoming and staying a public reporting company.
I am hoping that you, in our audience, will jump in and engage with us this week. Please chime
in with questions and comments in the chat. For those who already shared policy
recommendations, thank you! If you have not shared your policy ideas with us, there is still
time. Please send us those ideas at smallbusiness@sec.gov. Finally, I hope you stay through
the end of each day to help shape the policy that impacts access to capital for small businesses
and their investors. Each day we will conclude by asking you to vote to prioritize the
recommendations that we have received from the public. This will determine the
recommendations that are sent to Congress and the Commission in the report from the Forum.
34 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Before turning it over to Amy [Reischauer], I want to provide the standard SEC disclaimer for all
the SEC staff that will participate this week. The views that we express are our own, and may
not represent the views of other staff, the Commissioners or the Commission.
I also want to extend a big thank you to our panelists for sharing their insights with us, to our
SEC Chair and Commissioners for their support, and to the Small Business Advocacy team for
their unwavering and tireless work for small businesses and their investors. You will meet many
of our team members throughout the week. It takes a village to put together an event like this
and a lot of the work happens behind the scenes. Specifically, I want to recognize Amy
[Reischauer], Kim [Dinwoodie] and Lizzie [Sukut] who have worked around the clock to make
this event happen.
Without anything further, Amy, I turn it over to you.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 35
CHAIR GARY GENSLER
Thank you, Amy [Reischauer], for that kind introduction. Welcome
to the SEC’s 42nd Annual Government-Business Forum on Small
Business Capital Formation.
As is customary, I would like to note that my views are my own, and
I’m not speaking on behalf of the Commission or SEC staff.
I am the son and grandson of small business owners. My grandparents
on one side opened and ran a grocery store and on the other side a bar,
both in Baltimore. My dad, Sam Gensler, started a small business repairing vending machines. It
grew into a small vending machine business that served hundreds of other small businesses in the
process, such as small diners and bars.
In this sense, my family’s business was part of a larger community of small businesses, whose
owners were as diverse as the city of Baltimore.
The SEC’s Office of the Advocate for Small Business Capital Formation serves an important role at
the Commission. It represents America’s small businesses—like so many families across America.
Entrepreneurs and small businesses are integral to our
capital markets.
Over the last 25 years, small businesses have created
nearly two out of every three new jobs. They account for
a substantial amount of goods, services, and innovation.
“Over the last 25 years,
small businesses have
created nearly two out of
every three new jobs.30”
Even though public companies listed on the stock market
may dominate the daily news, more than 99 percent of U.S. businesses are small businesses. Their
employees make up nearly half of the American workforce.31
As small businesses grow, they often migrate from borrowing in bank markets to capital
markets. Having that breadth and depth in our markets facilitates capital formation. That’s why,
consistent with our mission and Congressional mandate, we are working to make them as efficient
as possible.
At the SEC, our job is to serve investors building for a better future and companies of every size
raising money to fund innovation. We do this while working to make our markets more efficient,
competitive, transparent, fair—and worthy of the public's trust. Further, we work to ensure that
markets serve investors and issuers—not the other way around.
36 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Many of the projects the SEC is working on today are focused on increasing the efficiency,
integrity, and resiliency of the markets to lower costs for all businesses raising capital and increase
returns for investors.
As you discuss the various topics this week, from the early-stage landscape and building
entrepreneurial ecosystems to investing in small business and accessing the public markets, please
let us know your ideas and policy recommendations.
We greatly benefit from your perspective, and this forum will inform a report that will be delivered
to Congress. Further, your perspective may help the Commission consider policies to benefit
American small businesses, like my dad and grandad’s, and support your efforts to innovate and
create jobs.
I’ll now turn it back over to Amy.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 37
COMMISSIONER HESTER M. PEIRCE
Good afternoon. Thank you to the Office of the Advocate for Small
Business Capital Formation for hosting the 42nd Annual Small
Business Forum and to our panelists for participating. I am excited
for this forum and today’s discussion on early-stage companies. My
views are my own and not necessarily those of the SEC or my fellow
Commissioners.
My most recent visit to Ohio took place during the height of ramp
season. Ramps are an edible wild vegetable. They grow spontaneously
in large patches on forest floors. During the short growing season, ramp aficionados spread out
across forest hillsides to forage as the plant’s oniony smell wafts about them and makes their
mouths water for the meal ahead. As with all things, ramps make me think about capital markets.
Unlike the plentiful ramp patches that are there for the (sustainable) picking,32 an early-stage
entrepreneur in need of funds rarely finds plentiful patches of capital waiting for her to harvest.
Foraging for capital can be a discouraging, time-consuming task with little to show for all the
work.
The Forum offers us an opportunity to hear directly from founders, investors, and other members
of the public about ways we can improve the capital options for small businesses. This panel, with
its focus on the early-stage landscape, is particularly important. Early-stage entrepreneurs often
abandon a stable job to take on the risks of starting a new business that will meet a need that
others in their community have. With a disruptor’s mindset, they are ready to take on the many
challenges of getting their companies off the ground. Sometimes they fail, and often they pick
themselves up, dust themselves off, and start a new business. Such resilient, optimistic, problemsolving people are essential to society.
The least the rest of us can do is offer early-stage entrepreneurs a regulatory structure that gives
them a fighting chance. Too often, however, the needs of these fledgling companies get lost in the
press of other business at the SEC. Or, worse, the early-stage landscape suffers under the regulatory
misconception that it is a bastion of fraud. Regulators who think that failure is synonymous with
fraud might not be eager to facilitate early-stage capital formation.
A more accurate picture of the landscape can
help form the basis for good policy. Good policy
enables a wide range of investors to participate
safely in the growth of early-stage companies. An
educated, informed, inquisitive investor with realistic
expectations, an appropriate mix of optimism and
skepticism, and a properly diversified portfolio of
investments can participate safely in early-stage
investing.
“Good policy enables a
wide range of investors to
participate safely in the growth
of early-stage companies.”
38 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
The ranks of investors willing to commit time and capital to new companies are thin, and I hope
this panel will help elucidate why. Is the uneven geographic distribution of patches of capital—a
problem documented by the 2022 Small Business Advocate Report33—a concern to the panelists?
How did the panelists or the businesses with which they work find their first investors? As this
year’s Small Business Advocate Report also noted, “[i]ndividuals with a mentor are 5X more
likely to plan to start a business than those” without one.34 Do the panelists find that having local
investors facilitates continuing mentorship as founders build their businesses?
Regulation can prevent patches of capital from growing in places they otherwise might. Wealth
and income measures largely determine the eligible pool of accredited investors. I emphatically
object to telling Americans that a whole sector of the economy is off-limits, but measures short
of discarding the accredited investor paradigm probably have broader appeal. For example,
allowing investors who had passed a sufficiently rigorous test, taken high-quality investing
courses, or had relevant professional degrees would expand the accredited investor pool. Other
potential options include allowing anyone to invest some percentage of her investment portfolio
in private companies—a technique already used in the crowdfunding rules—and allowing
people assisted by a sophisticated financial intermediary to invest. What would happen to capital
availability in their communities if the SEC raised the income and net-worth thresholds for
inflation, or otherwise narrowed the accredited investor definition? What do panelists think of
expanding the accredited investor pool by adding new measures of sophistication or pursuing one
of the other ideas I just mentioned?
In addition to amending our accredited investor regime, we can take other steps to make it easier
for early-stage founders. What do panelists think of a micro-offering exemption that would allow
companies to raise $250,000 or $500,000 without registering with the SEC or the states? Now
that more companies are relying on Regulation Crowdfunding, should we consider ways to make
it an even more practical solution for early-stage companies? Or do the panelists think that a
sensible regulatory framework for finders would be helpful in matching investors with companies?
Thank you for participating in this year’s Small Business Forum. Just as ramps do, the Forum
comes around every spring. Whereas the aroma of ramps—strong as it its—does not linger, I hope
this week’s conversations will waft through the rest of the year and spur continued collaboration
among policymakers, entrepreneurs, and investors throughout the year to come. I look forward to
the discussion.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 39
COMMISSIONER CAROLINE A. CRENSHAW
Welcome to day two! This is a great event, and I want to thank
the staff of the Office of the Advocate for Small Business Capital
Formation for all the work they put in to make this happen. I also
want to thank everyone who has taken time out of their normal, and
extremely busy, schedules to participate in the Annual Small Business
Forum. We appreciate that you’re here today. I look forward to the
discussion and I encourage participants to continue to engage the
Commission throughout the year and across our regulatory processes.
Time and schedules permitting, speak to as many of us at the
Commission as you can. The more interactions and perspectives that we have as an agency from
this community, the better.
Recently, in one of those continuing dialogues, someone reminded me of the importance of
disaggregating the term "small business" and recognizing that the term is a reference to a broad
spectrum. A spectrum that includes businesses first launching operations, using personal savings
and money from friends and family, thinking about accessing capital markets for the first time;
and also companies that have been operating for decades with dozens of employees, rely primarily
on revenue, and focus on a specific locality or region. The pertinent issues, challenges, and
opportunities for any small business depend upon where on that spectrum it is.
Earlier this year, I spoke about re-thinking our safe harbor for registration exemptions to better
calibrate them for use by small-, medium-, or early stage- businesses, rather than unlimited use by
the largest private companies that rival the size of many S&P 500 companies – or companies that
no longer exist on the spectrum of small businesses. I, of course, welcome perspectives on this topic
and also encourage recommendations and discussions on how else we can improve access and
inclusivity in financial markets.
I am focused on how to get the most resources
to the part of the spectrum where entrepreneurs,
and particularly entrepreneurs that do not
share the same background as those in Silicon
Valley and Wall Street, are tapping into a
capital market for the first time. What do
those entrepreneurs need the most and what
role can the Commission play? As one of
today’s panelists detailed in a book, startup
communities and entrepreneurial ecosystems are
complex, non-linear, and often unpredictable.
Actors, including governments, within those
communities and ecosystems must be adaptive.
And part of the thesis is that complex systems,
such as a startup community, must be driven
from the bottom-up rather than the top-down.
I agree with that entirely, and that is why
“[S]tartup communities and
entrepreneurial ecosystems are
complex, non-linear, and often
unpredictable. Actors, including
governments, within those
communities and ecosystems must
be adaptive. And part of the thesis
is that complex systems, such as
a startup community, must be
driven from the bottom-up rather
than the top-down.”
40 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
events like this are so important – to give voice to those who are working at the grassroots. I
firmly believe that engagement and refinement are, and should always be, a core characteristic of
Commission processes. Please come in and talk to us about your ideas, and your thoughts about
our ideas.
I am glad that there will be a discussion on Thursday about accessing the public markets. It is a
conversation that needs to be had, here and elsewhere. There are several ways to access the public
markets and, to quote one of our panelists again, it is important to think about this question
holistically.
In that vein, I want to highlight the benefits of public markets to smaller reporting companies
and their investors – given that a lot of time and ink is spent on the costs. Public markets provide
transparency that increases investor confidence, price transparency, and liquidity. In addition
to informational efficiencies, there is a baseline of comparability in public market disclosure
requirements that investors can rely upon with a high level of certainty and confidence, adding in
capital raising from a broad pool of investors. Further, the SEC has implemented a scaled or tiered
disclosure system to better tailor and adapt the benefits and costs, where appropriate.
So I look forward to Thursday’s agenda as well and I’d like to thank you one more time for your
engagement and I will get out of the way of today’s important discussions.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 41
COMMISSIONER MARK T. UYEDA
Good afternoon. It is a pleasure to address this Forum on Small
Business Capital Formation. Today’s panel will focus on the successes
and challenges facing smaller funds, including barriers to entry for
emerging fund managers. This topic is not new. In fact, last year’s
Forum also included a panel on emerging fund managers and their
role in diversifying capital.35 One policy recommendation arising out
of that panel was for the Commission to “[s]upport underrepresented
emerging fund managers – specifically minorities and women...”36
The Commission responded to that recommendation by stating that it “supports efforts to
improve diversity among fund managers and entrepreneurs who raise capital.”37 The Commission
pointed to its Small Business Capital Raising Hub, an educational resource to assist small
businesses in their capital raising efforts.38 The Commission also recognized that its Small
Business Capital Formation Advisory Committee had submitted similar recommendations in
2020 and 2021, and that other Commission advisory committees had submitted recommendations
on this topic.39
With such a large number of recommendations, the Commission ought to take concrete actions to
support such objectives. One pathway for success is for the Commission to carefully consider the
impact of its rules on small businesses and emerging fund managers.
For example, in February 2022, the Commission proposed a rule that would impose significant
new burdens on private fund advisers.40 Commenters have noted that private equity is a highly
competitive industry, and that the proposal is likely to place disproportionately large burdens on
advisers to small funds and first-time funds.41 One comment letter cited data that more womenand minority-owned firms are associated with smaller and first-time funds.42 Accordingly, the
proposal may have the effect of stifling the ability of emerging fund managers – including womenand minority-owned managers – to operate successfully.
One change that the Commission could make to ease
“Small businesses are the
the burden on emerging fund managers is to have a
heart of the American
longer transition period to comply with new rules. For
instance, the Commission recently adopted final proxy
economy and the
vote disclosure rules on Form N-PX for executive
compensation.43 Under the final rules, emerging fund
Commission must work
managers who file on Schedule 13F because they hold
to ensure that capital is
more than $100 million in equity securities would be
required to file Form N-PX for the very first time. Yet
available to them.”
emerging advisers with several hundred million in assets
under management were treated no differently than the
largest advisers with trillions of assets under management. Any new rule or modification often
requires further clarification to implement. Emerging fund managers should be able to have extra
time to allow these questions to be resolved before mandating compliance.
42 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
One might wonder how the Commission’s expanding private fund adviser regulations comport
with its expressed support for efforts to improve diversity among fund managers, especially since
the response to the Commission’s proposals from smaller fund managers has been resoundingly
clear: the increased burdens will make it more costly to operate and will disincentivize institutional
investors from allocating capital to emerging fund managers.
This Forum is an important venue for stakeholders to convey thoughtful policy recommendations
to the Commission. I am hopeful that participants in today’s panel will highlight the likely impact
of the Commission’s proposals on emerging fund managers.
Small businesses are the backbone of our economy, and private fund advisers play an important
role in providing capital to those businesses. Greater diversity in the private fund space can help
expand the numbers and types of businesses for which funding is necessary to flourish.
I appreciate the efforts of the Office of the Advocate for Small Business Capital Formation in
making this year’s Forum a success. I also want to thank the Forum’s panelists for contributing to
an important conversation, and I look forward to seeing the recommendations that emerge from
today’s discussion.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 43
COMMISSIONER JAIME LIZÁRRAGA
Good afternoon and thank you to Jenny and today’s panelists for your
time and input. It’s a pleasure to address the 42nd Annual Small Business
Forum, which as you know fulfills a congressional mandate as part of the
Small Business Investments Incentive Act of 1980. And that mandate is to
conduct an annual Forum to review current issues and programs relating
to small business capital formation – a very important part of what we
do here and an important priority for me.
I am particularly interested the insights from today’s discussion on
accessing public markets becoming and staying a public reporting company because I think it will be
very important informing what we do as part of our capital formation mission.
I am particularly interested in hearing
“[I]t can be very difficult for the smallest
about the successes and the challenges
businesses, particularly those from underof becoming a public company and the
factors that can help smaller company
represented communities that are still outside
succeed as public companies. I've said
of an entrepreneurial system, to navigate our
many times before, but it can be very
difficult for the smallest businesses,
very complex securities laws that are often
particularly those from under-represented
written in very inaccessible jargon.”
communities that are still outside of an
entrepreneurial system, to navigate our
very complex securities laws that are often written in very inaccessible jargon. So I challenge forum
participants today to try to think outside of the box in seeing how it's possible to encourage broadbased growth in our public markets from all types of small businesses and in a way that doesn't
Sacrifice our investor protection packet.
You've also heard before, all of us have heard before, the gap that we've seen in capital raise, in
private versus public markets. It really is a stark gap. In just a space of one year, between July 2021
and June 2022, almost a 4 1/2 trillion dollars was raised for 2 private offerings. By comparison, in
the public markets for IPOs, only around 126 billion was raised during the same period. And it's an
important set of numbers because over half, around 58 percent, of Americans report having invested
in our public markets.
So because of that, we need to ensure that our public markets are as robust as possible. To me,
the financial security of working families who invest in our markets -- whether it's for saving for
children's' education, buying a home, for their retirement -- that critically depends on our work.
And for these families that channel their hard-earned savings into our capital markets, we want to
ensure that they have access to a wide range of companies, all the while having the confidence that
their investments will come with all of the disclosures and all of the legal protections that are the
hallmark of our public markets.
Thank you again for allowing me to participate here and I very much look forward to hearing
today's discussion.
44 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
INTERAGENCY REMARKS
U.S. Department of the Treasury
KARL FOOKS, OUTREACH MANGER AND SME FOR VC PROGRAMS
Hello. Today's presentation will provide a brief update on the
State Small Business Credit Initiative (SSBCI) Equity Venture
Capital Programs (VCP). My name is Karl Fooks. I'm part of the
outreach team for the U.S. Department of Treasury's State Small
Business Credit Initiative, and along with my colleagues Eric Cromwell
and Dan Shmishner, I provide outreach on the SSBCI Equity Venture
Capital programs.
For those of you not familiar with SSBCI, this was a program reauthorized by the 2021 American
Rescue Plan Act. It provides $1 billion of funding to states, territories, the District of Columbia, and
tribal governments for these jurisdictions to operate small business financing programs.
The SSBCI Capital Program guidelines, allow for allow for jurisdictions to design and adapt small
business financing programs to reflect the name of their local and regional economies. There are
five broad platforms of SSBCI capital programs; capital access programs, equity venture capital
programs, loan participation programs, loan guarantee programs, and collateral support programs.
The application of broad federal parameters is required in the design of a jurisdiction's SSBCI
capital 10 program. First of all, the private lenders and investors participate participating in these
programs must have their own capital at risk. These programs must be able to demonstrate that
they can cause and result in one dollar a private financing at a minimum for every dollar of SSBCI
capital provided.
In addition, the jurisdictions had to be able to demonstrate that their program designs could crowd
in $10 of private financing for every one dollar of SSBCI capital deployed.
The eligible small businesses have to meet certain business size and transaction size requirements.
And the jurisdictions also had to address how the capital programs would create access to capital
for underserved communities.
Specifically for the equity programs there are two broad deployment types; a fund investment
program, in which the SSBCI capital is pooled with private capital in a venture capital fund and this
venture capital fund invests in small businesses.
A direct investment program, by contrast, the SSBCI capital is invested directly into a small business
alongside other private investors also investing in that business. These private investors could include
local venture capital funds operating in that jurisdiction's ecosystem.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 45
$3B
46
47
36
SSBCI funds
allocated to Venture
Capital Programs
Jurisdictions with
SSBCI Venture
Capital Programs
Direct Investment
SSBCI Venture
Capital Programs
Fund Investment
SSBCI Venture
Capital Programs
Data based on 46 state and territory programs
approved or proposed as of 2/10/23
Of the 46 applications reviewed or approved that included venture capital programs, these jurisdictions
allocated a total of $3 billion to the various equity programs. This breaks down into 47 direct
programs and 36 fund programs.
Number of Jurisdictions by
Size of Allocation to VCPs
16
5
9
16
Less than $25M
$50M to $100M
$25M to $50M
Greater than $100M
Data based on 46 state and territory programs approved or proposed as of 2/10/23
As a result, the scale of these programs is fairly significant: 9 programs are $100 million or larger;
70 percent of approved programs to date are between 25 million and 100 million in size; and a handful
are less than 25 million.
46 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
I can see by the map a majority of the U.S. is covered by these various equity venture capital
programs. Yellow represents jurisdictions that have both a direct and a funded program. Blue are
jurisdictions with just a direct program. Green are jurisdictions with only a fund program. And
gray represents jurisdictions that chose not to operate a venture capital program.
SSBCI Equity/Venture Programs
Direct and Fund Investment Programs
Direct Investment Program
Fund Investment Program
No Venture Capital Program
Map reflects approved and proposed
programs as of 2/10/23
Further information on each of these individual jurisdictions their programs and their contact
information can be found at the link provided at the bottom of the slide. In addition, you can go to
the SSBCI website and on the landing page you will see a link to the state programs and contacts.
Thank you very much for this opportunity to provide an update.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 47
ABOUT THE OFFICE OF THE ADVOCATE FOR
SMALL BUSINESS CAPITAL FORMATION
While the content of the Forum comes from participants, the planning, organizing, and executing of the
Forum is done by the SEC’s Small Business Advocacy Office. The Forum is one of many of the Office’s
responsibilities as it advocates for pragmatic solutions to address challenges faced by small businesses
and their investors raising and deploying capital. “Small business” for the Office spans from early-stage
start-ups raising seed capital, to later-stage private companies whose founders and investors are seeking
liquidity in the public markets, all the way to smaller public companies. Congress established the Office
via the bipartisan SEC Small Business Advocate Act of 2016 as an independent office within the SEC
that reports to the entire Commission as well as to multiple committees of Congress.
Meet the Team
AMY
REISCHAUER
JOHN
CAVANAGH
JENNY
CHOI
JULIE ZELMAN
DAVIS
KIM
DINWOODIE
DAVE
GESSERT
COURTNEY
HASELEY
SARAH
KENYON
VIKKI
PORTER
JENNY
RIEGEL
ELIZABETH
SUKUT
MALIKA
SULLIVAN
TODD
VANLAERE
Engage with Us!
Visit us online:
www.sec.gov/oasb
Speak to our team:
202.551.5407
Send us a message:
smallbusiness@sec.gov
48 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
Learn the ropes:
www.sec.gov/
capitalraising
ENDNOTES
1
The SEC conducts the Forum annually and prepares
this report in accordance with the Small Business
Investment Incentive Act of 1980 [15 U.S.C. 80c-1
(codifying section 503 of Pub. L. No. 96-477, 94
Stat. 2275 (1980))].
2
Participants voluntarily submitted the presented
information in connection with their registration
online. The report solely includes submitted data,
without inclusion of non-responses.
3
4
The SEC responds to the Forum recommendations
pursuant to the Small Business Investment Incentive
Act of 1980, as amended by the Economic Growth,
Regulatory Relief and Consumer Protection Act of
2018. 15 U.S.C. 80c-1. Section 503 of the Economic
Growth, Regulatory Relief and Consumer Protection
Act of 2018 [Pub. L. 115- 174, 132 Stat. 1296
(2018)] amended Section 503 of the Small Business
Investment Incentive Act of 1980 to add this
requirement in new paragraph (e). The responses do
not include any Commission initiatives that are not
yet public. Where a Forum recommendation relates
to an initiative as to which the Commission has
solicited or expects to solicit public comment, the
recommendation will be considered as part of that
initiative, along with other comments received.
See Office of Information and Regulatory Affairs,
Office of Management and Budget, U.S. Securities
and Exchange Commission Agency Rule List (Spring
2023), ) available at https://www.reginfo.gov/public/
do/eAgendaMain?operation=OPERATION_GET_
AGENCY_RULE_LIST¤tPub=true&agency
Code=&showStage=active&agencyCD=3235&csrf
_token=B7F12FC16EA1D20F5F4EA5954CCBD95
199E1A3F318F25CB7029D35FA24BDD398CEA1
784E5BAC03AA1E4BF814C2BCD38E6A0.
5
See “Accredited Investor Definition,” Release Nos.
33-10824; 34-89669; File No. S7-25-19 (Aug.
26, 2020), available at https://www.sec.gov/rules/
final/2020/33-10824.pdf.
6
See “Order Designating Certain Professional
Licenses as Qualifying Natural Persons for
Accredited Investor Status,” Release No. 33-10823
(Aug. 26, 2020), available at https://www.sec.gov/
rules/other/2020/33-10823.pdf.
7
See “Facilitating Capital Formation and
Expanding Investment Opportunities by
Improving Access to Capital in Private Markets,”
Release Nos. 33-10884; 34-90300; IC-34082;
File No. S7-05-20 (Nov. 2, 2020), available at
https://www.sec.gov/rules/final/2020/33-10884.pdf.
8
See “Notice of Proposed Exemptive Order
Granting Conditional Exemption from the Broker
Registration Requirements of Section 15(a) of
the Securities Exchange Act of 1934 for Certain
Activities of Finders,” Release No. 34-90112; File
No. S7-13-20 (Oct. 7, 2020), available at https://
www.sec.gov/rules/exorders/2020/34-90112.pdf.
9
We note that the Consolidated Appropriations
Act of 2023 amended Section 15 of the Securities
Exchange Act of 1934 to add a new subsection
15(b)(13) that provides an exemption to allow
an “M&A Broker” to effect certain securities
transactions in connection with the transfer of
ownership of a privately-held company without
registering as broker-dealer, subject to certain
conditions. The statutory exemption became
effective on March 29, 2023.
10
See https://www.sec.gov/education/capitalraising.
11
See https://www.sec.gov/education/glossary/cuttingthrough-the-Jargon.
12
See https://www.sec.gov/education/capitalraising/
navigator#1.
13
See https://www.sec.gov/education/capitalraising/
trends.
14
See https://www.sec.gov/education/capitalraising/
building-blocks.
15
See “Facilitating Capital Formation and
Expanding Investment Opportunities by
Improving Access to Capital in Private Markets,”
supra note 7.
16
See “Accredited Investor Definition,” supra
note 5.
17
See supra note 10.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 49
18
See Office of the Investor Advocate, “Report on
Objectives Fiscal Year 2024,” (June 29, 2023)
available at https://www.sec.gov/files/fy24-oiad-sarobjectives-report.pdf; see also Office of the Investor
Advocate, “Report on Activities Fiscal Year 2021,”
(Dec. 16, 2021) available at https://www.sec.gov/
files/FY21_OIAD_SAR_ACTIVITIES_REPORT_
FINAL_508.pdf.
19
See Office of the Investor Advocate, “Report
on Activities Fiscal Year 2022,” (June 28, 2021)
available at https://www.sec.gov/file/fy22-oiad-saractivities-report.pdf.
20
See “Concept Release on Harmonization of
Securities Offering Exemptions,” Release Nos.
33-10649; 34-86129; IA-5256; IC-33512; File No.
S7-08-19 (Jun. 18, 2019), available at https://www.
sec.gov/rules/concept/2019/33-10649.pdf.
21
See “Facilitating Capital Formation and Expanding
Investment Opportunities by Improving Access to
Capital in Private Markets,” supra note 7.
22
See “Accredited Investor Definition,” supra note 5.
23
The Company Act generally requires the
Commission to index the $10 million cap for
inflation, rounded to the nearest $1 million,
every five years. See Company Act, Section 3(c)
(1)(C) available at https://uscode.house.gov/
view.xhtml?req=(title:15%20section:80a-3%20
edition:prelim).
24
See supra note 10.
25
See “Commission Statement on Market Structure
Innovation for Thinly Traded Securities,” Release
No. 34-87327; File No. S7-18-19 (Oct. 17,
2019), available at https://www.sec.gov/rules/
policy/2019/34-87327.pdf.
26
See “The Enhancement and Standardization of
Climate-Related Disclosures for Investors,” Release
Nos. 33-11042; 34-94478; File No. S7-10-22 (Mar.
21, 2022), available at https://www.sec.gov/rules/
proposed/2022/33-11042.pdf.
27
See “Short Position and Short Activity Reporting
by Institutional Investment Managers,” Release
No. 34-94313; File No. S7-08-22 (Feb. 25,
2022), available at https://www.sec.gov/rules/
proposed/2022/34-94313.pdf.
28
See “Transfer Agent Regulations,” Release
No. 34-76743; File No. S7-27-15 (Dec. 22,
2015), available at https://www.sec.gov/rules/
concept/2015/34-76743.pdf.
29
The SEC’s Small Business Advocacy team
convenes the advisory planning group to
participate in Forum planning pursuant to 15
U.S.C. 80c-1(b).
30
See U.S. Chamber of Commerce, “The State of
Small Business Now,” (Apr. 10, 2023) available at
https://www.uschamber.com/small-business/state-ofsmall-business-now.
31
Id.
32
See Anthony Brown, “Careful Ramp Harvesting
is Traditional and Sustainable,” Cherokee One
Feather (Mar. 21, 2011) available at https://
theonefeather.com/2011/03/21/careful-rampharvesting-is-traditional-and-sustainable/.
33
See Office of the Advocate for Small Business
Capital Formation, “Annual Report: Fiscal Year
2022,” (Dec. 2022) at 16, available at https://
www.sec.gov/files/2022-oasb-annual-report.pdf
(“Advocate Report”) for a map which shows
that in 2022, Washington, California, New York,
Texas, and Florida had 24,980 Reg. D deals while
the bottom 45 states had 17,392 deals. According
to the U.S. Census Bureau, in 2022, the top five
states had a combined population of 118,766,674,
while the bottom 45 states had a population of
214,520,883. See Kristina Barrett, “Growth in U.S.
Population Shows Early Indication of Recovery
Amid COVID-19 Pandemic,” U.S. Census Bureau
(Dec. 22, 2022) available at https://www.census.gov/
newsroom/press-releases/2022/2022-populationestimates.html#:~:text=22%%202C%20
2022%20%E2%80%93%20After%20a%20
historically,components%20of%20change%20
released%20today. That amounts to the top five
states top five states having approximately 35.6%
of the total US population while still having 58.9%
of the total Reg. D deals. This was around a 159.3%
higher rate of deals per person than those in the
remaining 45 states.
34
Id. at 24.
50 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
35
See Securities and Exchange Commission, “41st
Annual Small Business Forum,” (modified Apr.
6, 2023) available at https://www.sec.gov/oasb/
sbforum2022.
41
See “Comment Letter of American Investment
Council,” (Apr. 25, 2022) available at https://www.
sec.gov/comments/s7-03-22/s70322-20126669287340.pdf.
36
See “Report on the 41st Annual Small Business
Forum,” (July 27, 2022) at 16, available at https://
www.sec.gov/files/2022-oasb-annual-forum-report.
pdf.
42
Id.
43
See “Enhanced Reporting of Proxy Votes by
Registered Management Investment Companies;
Reporting of Executive Compensation Votes by
Institutional Investment Managers,” Release Nos.
33-11131; 34-96206; IC-34745; File No. S7-11-21
(Dec. 22, 2022), available at https://www.govinfo.
gov/content/pkg/FR-2022-12-22/pdf/2022-24292.
pdf.
37
Id.
38
See supra note 10.
39
See “Report on the 41st Annual Small Business
Forum,” supra note 36.
40
See “Private Fund Advisers; Documentation
of Registered Investment Adviser Compliance
Reviews,” Release No. IA-5955; File No. S7-03-22
(Mar. 24, 2022), available at https://www.sec.gov/
rules/proposed/2022/ia-5955.pdf.
REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM | 51
52 | REPORT OF THE 42ND ANNUAL SEC SMALL BUSINESS FORUM
U. S . S E C U R I T I E S A N D E XC H A N G E CO M M I SS I O N
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.