The SEC Released its 41st Annual Small Business Forum Report

For 41 years, the Securities and Exchange Commission has hosted its annual Small Business Forum. The event, led by the SEC’s Office of the Advocate for Small Business Capital Formation, aims to gather feedback from both the public and private sectors to improve capital raising and sheds light on many issues facing small businesses and investors to help event participants develop policy recommendations.


Highlighting the needs of small businesses within the US is crucial, as they play a vital role in the economy and job creation. Over the past 25 years, 2 out of every 3 jobs created can be attributed to small businesses. These businesses serve as the lifeblood of their communities.


Some of the key takeaways from the four-day event included the fact that more entrepreneurs need to be made aware of resources available when raising capital, as many have great ideas, but lack the knowledge and experience to raise capital effectively. This also means expanding access to capital to both underrepresented groups and locations, especially outside of major “tech-hub hotspots.” Additionally, panel discussions highlighted the issues minority entrepreneurs continue to face when seeking traditional funding options, such as venture capital or private equity. These funding methods often rely heavily on networks and connections that exclude many entrepreneurs. 


According to sources such as Crowdfund Insider, the Commission has addressed past issues such as democratizing the definition of an accredited investor by empowering a more significant segment of the population to gain access to Reg D private securities offerings. However, other suggestions often face political challenges and regulatory obstacles.


Even so, Commissioner Hester Pierce urged the Commission and forum participants to be inspired by the JOBS Act. She also commented: 


“Heightening the importance of this year’s Forum is the Commission’s current posture of, at best, indifference, and at times, hostility to facilitating capital formation. As it happens, today is the tenth anniversary of President Obama signing into law the Jumpstart Our Business Startups (JOBS) Act. That bipartisan legislation required the SEC to write rules lessening the burdens on small companies seeking to raise capital. Some of the Act’s provisions were things we could have done on our own. Congress and the President got fed up waiting for the Commission to take small business capital formation seriously.”


Additionally, Commissioner Allison Lee remarked:


“Many investors are business owners and vice versa. And capital raising and investor protection are not at odds with one another or a zero-sum proposition. Rather, investors need appropriate investment opportunities, and investor protection increases investor confidence, which in turn helps promote capital raising. The relationship between the two is symbiotic and we can and should seek to balance the need for both robust capital raising opportunities and robust investor protection.”


Hopefully, seeing how the JOBS Act has expanded capital formation will encourage the SEC to continue the momentum and create more tools and resources to support small businesses. In the meantime, companies should explore existing options and opportunities for capital, such as through the JOBS Act. Small businesses should not wait for the SEC to create more opportunities – they should take advantage of the rules and regulations that are currently in place to raise the capital they need to grow their businesses.

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