Annual 

Report

FISCAL YEAR 2022
ABOUT THIS REPORT + ACKNOWLEDGEMENTS

This annual report of the Office of the Advocate for Small Business Capital Formation 

for Fiscal Year 2022 is being delivered to the Committee on Banking, Housing, and 

Urban Affairs of the U.S. Senate and the Committee on Financial Services of the U.S. 

House of Representatives in accordance with Section 4(j) of the Securities Exchange Act 

of 1934 (the Exchange Act), as amended by the SEC Small Business Advocate Act of 

2016, 15 U.S.C. § 78d(j)(6).

Pursuant to Section 4(j)(6)(D) of the Exchange Act, this Report is provided directly to

the committees of Congress without any prior review or comment from the Commission, 

any Commissioner, any other officer or employee of the Commission, or the Office of 

Management and Budget. It does not necessarily reflect the views of the Commission, the 

Commissioners, or staff of the Commission.

The work of the Office is possible only through the support of our talented and 

passionate colleagues across the agency. The Office owes special thanks to our colleagues 

who provided resources for this Report, including the Division of Economic and Risk 

Analysis for providing data to quantify the state of small business capital formation and 

contextualize issues, and the Office of Public Affairs for making our written product for 

this report visually engaging. We particularly thank the following individuals: [Names to 

be provided].
ANNUAL REPORT: FISCAL YEAR 2022 | i

Message from the 

Small Business Advocacy Team

I

t has been another challenging year for small businesses. While the most significant hardships 

brought by COVID-19 appeared to lessen, many small businesses were simultaneously forced to 

confront a host of new issues. This year has brought an acute awareness of disruptions to supply 

chains, rising interest rates, inflationary pressures, a constrained labor market, and heightened 

geopolitical conflicts. 

For small businesses looking to raise capital, the “banner year” we discussed in our 2021 annual report 

quickly faded away. Raising investment capital became harder at every stage of the capital raising cycle. 

The challenges for underrepresented founders were even further magnified. 

Now, more than ever, it is important to focus on the need for strong connections between founders and 

the investors looking to support them, as reflected in the visual theme of this year’s annual report: building 

bridges. We call on Congress, the Commission, and our partners to support small businesses and their 

investors, with a particular focus on underrepresented founders and their investors. 

On a more personal note, this year brought the departure from the SEC of Martha Legg Miller, the 

inaugural Director of the Office. Martha brought wisdom, vision, and creativity, all of which have come 

to define the work of the Office. Each of our annual reports has endeavored to embody those qualities. 

Martha’s legacy is extensive and wide ranging—from our novel and interactive educational resources 

that break down the securities laws and empower entrepreneurs and their investors, to behind-the-scenes 

advocacy for policy changes that gave a voice within the Commission to entrepreneurs and investors 

alike. Thank you, Martha, for your public service. We hope this year’s report shows that we are proud to 

continue passionate advocacy for small businesses and their investors!
Office of the Advocate for

Small Business Capital Formation

An independent office housed 

within the U.S. Securities

and Exchange Commission, 

created by Congress

One called to use your 

voice for others, derived 

from Medieval Latin

The deployment of 

productive capital by 

informed investors to 

create economic growth

From startups to small cap, 

“small” is relative for the Office, 

which supports emerging, 

privately-held companies up to 

small public companies

Breaking Down Our Long Title
ANNUAL REPORT: FISCAL YEAR 2022 | iii

Contents

ABOUT THE OFFICE 111

HIGHLIGHTS FROM FISCAL YEAR 2022 114

STATE OF SMALL BUSINESS CAPITAL FORMATION 13

Small and Emerging Businesses 22

Mature and Later-Stage Businesses 31

Small Public Companies 39

Women Business Owners and Investors . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Minority Business Owners and Investors 54

Natural Disaster Areas 62

Rural Communities 64

POLICY RECOMMENDATIONS 69

Entrepreneurs and their investors need accessible tools and educational 

resources to navigate complex securities laws 70

Targeted regulatory changes can improve access to capital . . . . . . . . . . . . . . .72

Connecting founders with savvy investors is essential to capital raising 76 

Emerging fund managers play a key role in small business capital formation and 

need support. 78

Scaled disclosures for small public companies help them stay public. 81

SMALL BUSINESS CAPITAL FORMATION ADVISORY COMMITTEE 

FY2022 SUMMARY 185

ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193

ANNUAL REPORT: FISCAL YEAR 2022 | 1

T

he Office advocates for solutions to address challenges faced by small businesses and their 

investors raising and deploying capital. “Small business” for the Office spans from early-stage 

startups 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 U.S. Securities and Exchange Commission (SEC) that reports to the entire 

Commission as well as to multiple committees of Congress.

The Office approaches its advocacy mission by: 

§	Engaging with small businesses and their investors to understand their most pressing capital 

raising issues; 

§	Identifying unique capital raising challenges faced by minority-owned, women-owned, rural, and 

natural disaster-affected small businesses and their investors; 

§	Analyzing the potential impact of policy changes likely to significantly affect small businesses and 

their investors; and 

§	Advocating to Congress and the Commission for policy changes.

Mission

We champion pragmatic solutions so that small businesses—from startups to smaller public 

companies—and their investors can build great companies together using our capital markets. 

Core Values

§	ACCESSIBILITY — We engage with both small businesses and their investors, as well as with 

the SEC, SROs, Congress, and other agencies on a regular basis through a variety of channels.

§	INCLUSIVITY — We encourage people to speak openly and contribute authentically to 

facilitate greater trust and collaboration.

§	PRAGMATISM — We approach problems with a solution-oriented mindset to make 

practical recommendations.

§	EFFICIENCY — We operate like a lean startup, maximizing resources and focusing activities 

where the Office can have a meaningful impact.

About the Office
2 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

SEBASTIAN GOMEZ 

ABERO

Deputy Director

Our Advocacy Team

AMY REISCHAUER

Strategic Engagement 

Advisor

JEPHTE LANTHIA

Special Counsel

JULIE ZELMAN 

DAVIS

Senior Special Counsel

JOHN CAVANAGH

Special Counsel

COURTNEY 

HASELEY

Special Counsel

MALIKA SULLIVAN

Executive Assistant

SARAH R. KENYON 

Capital Formation Analyst

VIKKI PORTER

Visual Design Strategist

KIM DINWOODIE 

Engagement Specialist

JENNY J. CHOI

Special Counsel

JENNY RIEGEL

Policy Manager

TODD VANLAERE

Law Clerk
ANNUAL REPORT: FISCAL YEAR 2022 | 3

FY2022 at a Glance

We engage with small businesses and their investors from around the country to hear their perspectives 

on issues facing the small business ecosystem, from policy, to changing trends in capital raising, to 

the complexities of the capital raising regulatory framework, to unique challenges and opportunities 

of different demographic groups and geographic regions. The insight we gain from our events and 

conversations with small business ecosystem participants provides timely, practical feedback to inform 

the Commission’s policymaking as well as the Office’s further outreach and educational efforts.

Our reach extends coast to coast, across media platforms, and to a range of partners and organizations.

68

SPEAKERS

32 EVENTS

1/3 in person

36 HOURS

of content

85+ @SECGov TWEETS

and 2MM+ IMPRESSIONS

across our social media platforms

2K+

ATTENDEES

24+

PARTNERS

collaborated 

on events

52

U.S. STATES and territories,

10 TRIBAL NATIONS, and

25 COUNTRIES represented
4 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Our educational resources cover a range of topics, are easily accessible, and are expanding.

3 YEARS 

OF DATA

in our interactive

CAPITAL TRENDS MAPS

10

BUILDING 

BLOCKS

1 CAPITAL 

RAISING HUB

for all SEC 

small business 

resources

24K+ VISITS

to the

CAPITAL RAISING HUB

119K+

views of our

EDUCATIONAL TOOLS and

SMALL BUSINESS RESOURCES

1 NAVIGATOR TOOL

to explore many pathways to capital

68 TERMS

in our expanded

CUTTING THROUGH 

THE JARGON glossary

8new

EDUCATIONAL 

VIDEOS
ANNUAL REPORT: FISCAL YEAR 2022 | 5

Outreach and Engagement

This year, we had opportunities to connect in person at outreach events and in small group gatherings. 

We also continued to leverage the benefits of remote engagement by reaching diverse audiences across 

the small business ecosystem and across the country through virtual events and speaking engagements. 

We found opportunities to share information about our Office’s resources, programs, and services and 

to hear from small businesses, their investors, and other thought leaders in the market. 

Entrepreneurs shared their challenges and successes building and funding their businesses.

[Starting a business] is very tough. You have to have a passion for it. You have to 

believe in yourself and never accept no for an answer.

 — DOKMAI WEBSTER, Founder and CEO,

 Pivotal Point LLC

We heard from women and minority entrepreneurs about the unique challenges they face and 

how obstacles to capital raising are heightened for underrepresented groups. 

One struggle for a lot of underrepresented founders is that many don’t have 

mentors. If only two percent of venture dollars are going to Black and minority 

founders, then there aren’t that many to get advice from. Without that network and 

the advice of people who have been there before, [new founders] can’t get there.

 — DAVE LU, Founder and Managing Partner,

 Hyphen Capital

Founders and investors across the country shared insights about the challenges and opportunities 

of raising capital outside of the traditional hubs.

As [local entrepreneurial ecosystems] develop and the number of firms increase over 

time in an area, you develop a critical mass that then makes it easier to attract 

subsequent investment.

 — MARYANN FELDMAN, Watts Endowed Professor,

 Arizona State University

We engaged with fund managers, investors, and entrepreneurs on how to increase diversity among 

capital allocators and the impact it could have on underrepresented founders.

As a woman who has had success and came from very humble beginnings, it’s 

my responsibility to recruit more women and people of color to invest. Because 

research shows that if you have more women and people of color investing, 

more women and people of color get funded.

 — CAROLINE CUMMINGS, CEO,

 Regional Accelerator & Innovation Network (RAIN)
6 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Highlights from FY2022

Some of the events in which we have engaged this year include:

Hosted our third annual 

Capital Call, styled 

after public companies’ 

earnings release calls 

and giving the public 

opportunities to ask 

live questions.

Showcased our 

Office’s Capital 

Raising Navigator 

tool and other 

educational resources 

on a podcast with Dave 

Lynn of TheCorporate

Counsel.net.

Discussed diversity 

among capital allocators 

and entrepreneurs and 

bridging the divides at 

Kenan’s Frontiers of 

Entrepreneurship Series.

Shared an overview 

of the SEC and capital 

raising pathways 

with cohort of 

Florida International 

University MBA

students interested 

in entrepreneurial 

ventures.

Q1 FY2022 Q2 FY2022

Joined Wyoming 

founders, investors, 

and small business 

leaders for an engaging 

conversation hosted by 

gBETA about capital 

raising for early-stage 

Wyoming companies.

Joined UNC’s Black 

Technology Ecosystem 

Investors Certificate 

Program to discuss 

rules on early-stage 

investing, focusing on 

building ecosystem 

capacity through the 

equitable inclusion of 

Black investors.

Joined the U.S. Small 

Business Administration

and the Department 

of Treasury for 

#NatlEshipWeek’s 

Funding & Financing 

Friday event highlighting 

the wide array of 

government programs 

and resources available 

to entrepreneurs 

seeking to launch and 

grow a business.

Engaged in discussion 

on challenges women 

face when raising 

capital, especially 

women of color, at 

Phoenix, AZ event 

hosted by Prestamos 

CDFI Women’s 

Business Center.

Discussed the SEC’s 

role in expanding DE&I 

in capital formation 

and equity ownership 

with investors and 

entrepreneurs at the 

Carta Equity Summit.

Shared challenges 

and insights on how 

historically underfinanced entrepreneurs 

may seek to build 

investor networks and 

access capital raising 

resources at event 

hosted by William 

Factory Small Business 

Incubator.
ANNUAL REPORT: FISCAL YEAR 2022 | 7

Featured in the 

National Diversity 

Coalition’s town 

hall panel discussion 

highlighting the need 

to bridge access 

to educational and 

legal resources for 

minority-owned small 

businesses—with 

specific focus on 

empowering the AAPI 

community.

Hosted the SEC’s 41st 

annual Small Business 

Forum. 

Q3 FY2022 Q4 FY2022

Engaged with 

students from 

University of 

Missouri-Kansas 

City’s executive MBA 

program on the 

SEC’s rulemaking and 

regulatory processes.

Delivered the keynote 

presentation at the 

Michigan Celebrates 

Angels annual event 

celebrating the success 

of angel investors in 

Michigan startups and 

early-stage technologybased companies.

Joined the Department 

of Treasury and 

state and tribal 

representatives for 

an overview of how 

federal securities laws 

apply to investment 

capital raising—

specifically for State 

Small Business Credit 

Initiative equity 

program investments.

Joined the Capital 

Region Minority 

Supplier Development 

Council for a panel 

discussion on the 

challenges facing 

minority business 

owners.

Joined the University 

of Houston C.T. Bauer 

College of Business for 

a series of discussions 

on entrepreneurship, 

capital raising, and the 

importance of diversity, 

equity, and inclusion.

Shared SEC tools 

and resources for 

empowering business 

owners to learn more 

about capital raising at 

a workshop hosted by 

KiwiTech.

Participated in a 

roundtable hosted 

by Engine during 

#StartupAdvocacyWeek 

on innovative endeavors 

by entrepreneurs across 

the country.

Led a webinar on equity 

capital raising hosted by 

Small Business Majority

on challenges facing 

women and minority 

business owners and 

demonstrated SEC 

tools to empower 

entrepreneurs.
8 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

41st Small Business 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.11 The Forum covers a broad range of issues 

affecting small businesses and their investors, from early-stage entrepreneurial ventures to smaller public 

companies.

This year marked the 41st Forum, which the Office hosted virtually over four days from April 4-7, 2022. 

Each day featured speakers with in-depth knowledge of the issues facing small businesses across the 

country, spotlighting the following topics:

At the end of each day’s session, participants prioritized policy recommendations on that topic to be submitted 

to the SEC and to Congress. Video archives of each day’s events are available in the Forum video gallery. 

On July 28, 2022, the Commission delivered the 2022 Forum Report to Congress, which summarizes the 

Forum proceedings, including the recommendations developed by participants for changes to the capital raising 

framework and the Commission’s responses to those recommendations.

Monday, April 4

Empowering Entrepreneurs

Tools to navigate capital raising

Tuesday, April 5

Hometown Entrepreneurship

How entrepreneurs can thrive outside of 

capital raising hubs

Wednesday, April 6

New Investor Voices

How emerging fund managers are 

diversifying capital

Thursday, April 7

Small Cap World

What to know and how to think ahead

AGENDA
ANNUAL REPORT: FISCAL YEAR 2022 | 9

Educational Tools and Resources 

In the fall of 2021, in partnership with other SEC offices and divisions, we 

launched our Capital Raising Hub,2 a centralized portal for educational 

tools and resources for entrepreneurs and their investors. We have continued 

to expand and update the Capital Raising Hub in response to feedback 

from small businesses and investors to make it easier to find all of our small 

business resources. In addition, the Capital Raising Hub is now directly 

accessible under the “Education” tab on the SEC’s homepage. Visitors to the 

Hub will find resources to support each phase of the capital raising journey.

Navigate Your Options

We have continued to improve our interactive tool that 

explores regulatory pathways to raise capital, identifying 

the most relevant options based on the user's answers 

to a series of questions about their business.

Cutting Through the Jargon

We also have expanded our curated glossary of key 

terminology that makes the language of capital raising 

more accessible to small businesses and their investors.

Building Blocks

This year, we launched the first of several installments of our suite of educational 

materials that break down fundamental securities law concepts into plain language. 

We have continued to expand this collection of resources based on feedback 

received directly from prospective users through our outreach efforts.

Capital Raising Video Gallery

As part of the expansion of our Capital Raising Hub, 

we launched our new Capital Raising Video Gallery, 

where users can find a number of educational videos, 

including our Capital Raising 101 series and other videos 

highlighting pertinent capital raising topics and data.

Getting Started: 

Understanding the Fundamentals

CAPITAL 

RAISING 

HUB
10 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Continuing the Journey:

Exploring Pathways to Raise Capital

Exempt Offerings

Through the more comprehensive Capital Raising 

Hub, users can find our resources on common capital 

raising pathways—like how to raise capital from 

investors without registering the offer and sale of 

those securities with the SEC.

Going Public

The expanded Capital Raising Hub also directs 

users to resources on how to prepare for and raise 

capital through a registered public offering.

Rulemaking Video Gallery

In our efforts to monitor the potential impact of policy 

changes on small businesses and their investors, we 

launched several videos that provide a high-level 

summary of relevant policies or rulemaking initiatives 

that the Commission is considering.
ANNUAL REPORT: FISCAL YEAR 2022 | 11

The Landscape:

Data, Research, and Other Resources

Research Reports

Reports and studies on capital raising issues and 

trends from around the country are also available.

Small Business Compliance Guides

Our comprehensive Capital Raising Hub affords 

easy access to the SEC's small business compliance 

guides, which provide valuable information on SEC 

rules on offering and selling securities and financial 

and other reporting by public companies and how 

they may affect smaller businesses.

Capital Trends Maps

We regularly update the data available through our 

interactive maps to allow users to stay informed about 

how and where capital is being raised across the country.
12 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION
ANNUAL REPORT: FISCAL YEAR 2022 | 13

State of Small Business 

Capital Formation

Rule 506(c)

$148B

($800,000 median)

Rule 506(b)

Private Placements

$2.3T

($1.3M median)

Regulation A

$1.8B

($2.2M median)

Crowdfunding

$368M

($100,000 median)

Rule 504

$624M

($250,000 median)

Other Registered

Offerings

$1.1T

($450M median)

What regulatory pathways are companies using to raise capital?3

T

he data provided in this Report is derived from public filings with the SEC, as analyzed by the 

SEC’s Division of Economic and Risk Analysis (DERA), and is supplemented with figures and 

findings from third parties. We hope this approach provides a comprehensive snapshot of the 

state of U.S. small business capital formation, amalgamating many important pieces of the capital 

formation story into one resource to aid in evaluating the current flow of capital between investors 

and small businesses. The data supplements anecdotal evidence and helps quantify the successes and 

challenges in small business capital formation nationwide. Unless otherwise indicated, the data period 

for DERA data is July 1, 2021 to June 30, 2022. Using data, we can better identify what tools, strategies, 

and approaches would be most helpful in crafting policy solutions.

Initial Public 

Offerings

$126B

($150M median)

Other Exempt 

Offerings4

$2.0T
14 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

What pathways are available to raise capital from investors?

EXEMPT OFFERINGS

Offerings conducted pursuant to an exemption from registration are often referred to as exempt offerings. 

There are multiple exemptions available for small businesses looking to raise capital from investors.

Rule 506(b) Private Placements allow companies to raise 

unlimited capital from investors with whom the company has a 

relationship and who meet certain wealth thresholds or have certain 

professional credentials. A company cannot use general solicitation 

in a 506(b) private placement.

5

Rule 504 Limited Offerings allow companies to raise up to $10 

million in a 12-month period, in many cases from investors with 

whom the company has a relationship.

7

Intrastate Offerings allow companies to raise capital within a 

single state according to state law. Many states limit the offering 

to between $1 million to $5 million in a 12-month period.

9

Regulation Crowdfunding Offerings allow eligible companies 

to raise up to $5 million in investment capital in a 12-month period 

from investors online via a registered funding portal.

8

Regulation A Offerings (sometimes called a “mini-IPO”) allow 

eligible companies to raise up to $20 million in a 12-month period in 

a Tier 1 offering and up to $75 million in a 12-month period in a Tier 

2 offering through a process similar to, but less extensive than, a 

registered offering.

10

Rule 506(c) General Solicitation Offerings allow companies to 

raise unlimited capital by broadly soliciting investors who meet 

certain wealth thresholds or have certain professional credentials.

6
ANNUAL REPORT: FISCAL YEAR 2022 | 15

Initial Public Offerings (IPOs) provide an initial pathway for 

companies to raise unlimited capital from the general public 

through a registered offering. After its IPO, the company will be a 

public company with ongoing public reporting requirements.

11

REGISTERED PUBLIC OFFERINGS 

A registered public offering is commonly used to describe an offer and sale of securities that has 

been registered under the Securities Act. Companies must file a registration statement with the SEC 

and may not sell the securities until the SEC declares the registration statement effective.

REGISTERED OFFERINGS REGULATION D REGULATION A

$10B

$33M

$375M

$89M

$755M

$89M

$143M

$33M

Banking and 

Financial Services

Technology

Real Estate

Energy

Health Care

Manufacturing

Hospitality, Retailing, 

Restaurants

Business Services

$576B

$155B

$64B

$108B

$67B

$40B

$39B

$76B

$233M

$2B

$34B

$3B

$2B

$42B

$84B

$99B

Secondary Registered Offerings allow companies to raise 

unlimited capital through secondary offerings using a registration 

statement filed with the SEC.

12

How are different industries using the top 3 offering pathways 

to raise capital (excluding pooled funds)?13
Where are companies raising capital?14

The following maps illustrate the concentration of estimated total capital raised under various offering 

types by issuers that report a primary location in the U.S., with the number of offerings conducted 

indicated on each state.

AK

9

AL

208

AR

137

AZ

516

CA

6,340

CO

1,057

DC

285

FL

2,028

DE

1,215

GA

676

HI

36

ID

125

IL

1,129

IN

249

KS

152

KY

118

LA

78

ME

61

MD

426

MI

357

MN

377

MO

206

MS

34

MT

67

NC

601

ND

46

NE

84

NH

67

NM

59

NJ

587 NV

341

NY

5,688

OH

497

OK

138

OR

310

PA

803

SC

187

RI

51

CT

615

MA

1,695

SD

46

TN

365

TX

3,434

UT

1,947 VA

617

VT

300

WA

7,490

WI

180

WV

8

WY

207

PR

79

VI

1

IA

123

GU

0

Regulation D

NONE LESS THAN $1 BILLION $1 BILLION - $5 BILLION $5 BILLION - $20 BILLION OVER $20 BILLION

NONE LESS THAN $500,000 $500,000 - $1 MILLION $1 MILLION - $5 MILLION OVER $5 MILLION

Regulation 

Crowdfunding

AK

0

AL

4

AR

1

AZ

13

CA

194

CO

19

DC

4

FL

61

DE

11

GA

24

HI

2

ID

11

IL

14

IN

2

KS

1

KY

4

LA

2

ME

3

MD

12

MI

10

MN

9

MO

10

MS

0

MT

1

NC

12

ND

1

NE

0

NH

10

NM

4

NJ

10 NV

8

NY

71

OH

13

OK

2

OR

10

PA

33

SC

10

RI

1

CT

16

MA

50

SD

0

TN

11

TX

59

UT

15 VA

20

VT

3

WA

14

WI

6

WV

0

WY

1

PR

1

VI

0

IA

3

GU

0
Regulation A

Registered 

Offerings

AK

0

AL

0

AR

0

AZ

8

CA

53

CO

4

DC

6

FL

38

DE

2

GA

11

HI

0

ID

1

IL

4

IN

2

KS

0

KY

1

LA

0

ME

1

MD

3

MI

0

MN

3

MO

0

MS

0

MT

0

NC

5

ND

1

NE

0

NH

0

NM

0

NJ

6 NV

15

NY

101

OH

2

OK

2

OR

2

PA

2

SC

1

RI

0

CT

1

MA

3

SD

0

TN

0

TX

6

UT

4 VA

3

VT

0

WA

7

WI

0

WV

0

WY

1

PR

1

VI

0

IA

0

GU

0

AK

4

AL

5

AR

9

AZ

28

CA

349

CO

31

DC

10

FL

89

DE

14

GA

42

HI

2

ID

5

IL

74

IN

20

KS

2

KY

9

LA

2

ME

12

MD

22

MI

107 

MN

34

MO

22

MS

3

MT

0

NC

54

ND

1

NE

18

NH

2

NM

2

NJ

50 NV

25

NY

442

OH

59

OK

5

OR

9

PA

55

SC

6

RI

4

CT

35

MA

127

SD

2

TN

20

TX

173

UT

19 VA

60

VT

0

WA

35

WI

9

WV

0

WY

1

PR

0

VI

0

IA

4

GU

0

NONE LESS THAN $5 MILLION $5 MILLION - $20 MILLION $20 MILLION - $75 MILLION OVER $75 MILLION

NONE LESS THAN $1 BILLION $1 BILLION - $5 BILLION $5 BILLION - $20 BILLION OVER $20 BILLION
18 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

What is happening with Regulation Crowdfunding offerings? 

The number and amount of crowdfunding offerings continue to 

increase, supporting more women-founded, minority-founded, and 

geographically diverse companies across the U.S.

15

U.S. Counties with Crowdfunded 

Companies16

Quarterly New Crowdfunding 

Offerings17

160,000

employees were 

supported by 

crowdfunded 

businesses

46%

of crowdfunded 

issuers that raised 

$1 million or more 

had women 

founders

66%

of investments 

supported traditional 

smaller businesses 

vs. tech startups

$1,057

is the average 

investor check size, 

regardless of the $442.6M size of the raise

in 2021 capital 

commitments, up 

41% from 2020

1,488

offerings in 

2021, up 29% 

from 2020

70%

of capital 

is distributed 

outside the top 10 

traditional 

capital hubs

41%

of crowdfunded 

issuers that raised 

$1 million or more 

had minority 

founders

2021

216 Counties

2020

137

Counties

2019

121

Counties

Q3 Q4 Q1 Q2 Q3 Q4 Q1

2020 2021

New Form C Filings

New Form C Filings with Max Offering 

from $1.07M to $5M

Q2

2022

227

Q1 Q2

238

333

367 350

41

357

433 446

396 382

132

169 175

128 134
ANNUAL REPORT: FISCAL YEAR 2022 | 19

What is happening with Regulation D offerings?

Pooled funds continue to account for over 85 percent of the funds 

raised under Regulation D.

18

What are the top industries raising capital through Regulation D 

(excluding pooled funds)?19

Amounts Raised by Other Issuers

New Offerings by Other Issuers New Offerings by Pooled Funds

Amounts Raised by Pooled Funds

8,060

July 2020 - June 2021 July 2021 - June 2022

Technology

Banking and Financial Services

Health Care

Real Estate

Energy

$2.6B $92B

$84B

$49B

$42B

$41B

$34B

$1.2B $38B

$76B

$6B

$10B

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2020 2021

Q2

2022

$418B

4,585

2,595

3,465 3,912 4,783

5,333

$47B

$263B

$39B

$344B

$46B

$305B

$61B

$699B

$89B

$406B

$92B

$648B

$85B

$411B

$97B

$619B

$76B

$394B

$73B

5,195

5,777 6,178 5,173

2,456

2,829

3,371

5,420

5,149

5,263

6,233 6,361

5,713
20 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

What is happening with Regulation A offerings? 

The amounts sought have declined following the peak in the third 

quarter of 2021.

20

What are the top industries seeking capital through Regulation A?21

Amounts Sought in Qualified Offerings

New Offerings New Offerings Seeking Between >$50M and $75M

New Offerings Seeking $50M or Less

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2

2020 2021

Q4

2022

$901M

46

63

72

66

92

86

56

86

80

74

71 68

98 96

82 82

$394M

$1.3B

$690M

$1.4B

$1.1B

$2.4B

$1.4B $1.5B

$816M

6

12 12 11

16

8

Following the Commission’s increase 

of the maximum amount from $50M to 

$75M, over 80% of offerings continue to 

seek to raise $50M or less.

July 2020 – June 2021 July 2021 – June 2022

Real Estate

Banking and Financial Services

Business Services

Manufacturing

Technology

Health Care

$2.6B $755M

$755M

$183M

$375M

$155M

$233M

$143M

$325M

$89M

$89M

$82M

$109M
ANNUAL REPORT: FISCAL YEAR 2022 | 21

What is happening with IPO activity?

While 2020 and 2021 were busy years for the IPO market, there has 

been a downward trend in the first half of 2022 in terms of both volume 

and amount of initial public offerings and other public offerings.

22

What are the top industries raising capital in IPOs (excluding pooled funds)?23

July 2020 – June 2021 July 2021 – June 2022

Technology

Manufacturing

Banking and Financial Services

Business Services

Health Care

Hospitality, Retailing, Restaurant

$62B

$22B

$12B

$18B

$11B

$7B

$15B

$3B

$2B

$5B

$7B

$23B

Total IPO Proceeds Number of IPOs

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2020 2021

Q2

2022

$13B

$23B

$63B

$66B

$133B

$56B

$46B

$64B

$13B $4B

45

175

209

417

193 195

261

88

44

66
22 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Small and Emerging Businesses

T

his segment of companies includes both high-growth startups that raise capital to get off the 

ground and launch early prototypes, as well as small businesses that create local jobs but may 

not fit the high-growth model that is the typical target of venture capital (VC) investments.24

Why is access to capital for small and emerging businesses 

so important?

Small businesses have an outsized impact on job creation.

66%

Small businesses

have accounted for 66% of employment 

growth over the past 25 years.

25

61.7 million Americans

are employed by a small business

(46.4% of U.S. employees).

26

Small businesses remain central to our society and the American dream.

For the third year in a row, the public has the most confidence 

in small businesses out of 16 categories of major institutions in 

American society.

27

Capital remains among the most impactful ways to strengthen access 

to entrepreneurship ... When business owners do not have access to 

personal funds or quality capital, they are less able to take the risks 

necessary to grow their businesses, artificially stifling the marketplace. 

 EWING MARION KAUFFMAN FOUNDATION28

“
ANNUAL REPORT: FISCAL YEAR 2022 | 23

Access to capital was the number one barrier 

to company survival.

29

75% of entrepreneurs have experienced 

challenges in obtaining capital.

30

89% of entrepreneurs say access to capital is 

limiting their business growth potential.

31

78% of entrepreneurs say access to capital is limiting 

their day-to-day operations.

32

Access 

to Capital

Early-stage entrepreneurs report struggles and need support as 

they build new companies

Access to capital remains a persistent barrier to growth for all entrepreneurs.

Entrepreneurs need support in accessing capital.

of owners are looking for support in preparing 

to apply for and using business financing.73% 33

Bridging gaps between entrepreneurs and investors remains the 

biggest challenge for early-stage startups when raising capital.

34

Finding a lead investor 40%

Landing a warm intro 38%

Creating a pitch deck 10%

Pitching via Zoom 7%

Negotiating terms 4%
24 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Robust ecosystems add to the success of early-stage startups.

Individuals with a 

mentor are 5X more

likely to plan to start a 

business than those who 

do not have a mentor.

35

The introduction of

accelerators to a

region has a significant 

impact on the number 

of early-stage deals for 

new businesses.

36

Many small businesses have not recovered to prepandemic levels, 

in terms of both revenue and employment, with the effects of the 

pandemic hitting disproportionately hard among firms in the leisure and 

hospitality sector, smaller firms, and firms owned by people of color. 

 FEDERAL RESERVE BANKS41

“

An increasing percentage of small businesses are experiencing 

financial challenges.

40

85% of small businesses experienced financial challenges

in 2021 (up from 81% in 2020 and 66% in 2019).

Several metrics of entrepreneurship have improved, but many 

small businesses have not recovered to prepandemic levels

In 2021, 5.4 million new 

business applications

were filed—more than 

20% higher than any 

previous year on record.

37

74% of all counties

had more business 

establishments in Q3 

2021 than they did prior 

to the pandemic.

38

82% of new startups

survived one year after 

founding (up from 78% in 

2020 and 79% in 2019).

39
ANNUAL REPORT: FISCAL YEAR 2022 | 25

What are common sources of capital for small and emerging 

businesses when facing financial challenges?42

34% of firms sought financing 66% did not apply

Received 

None 

12%

Received 

Some 

7%

Received 

Most 

5%

Received All 

11%

Sufficient Financing 

31%

Debt Averse 

17%

Discouraged

9%

Other 

9%

24% 

shortfall

42%

needs 

met

35%

unmet 

needs

Grants or donations (no repayment) 71%

Personal funds 61%

Cash reserves 56%

For those small businesses 

that sought external 

financing, only 6% sought 

equity investments.

43

Loan or line of credit 76%

Credit card 29%

Trade credit 9%

Merchant cash advance 8%

Lease 8%

Equity investment 6%

Factoring receivables 4%

External financing (with repayment) 52%

In 2021, fewer small businesses than in prior years received all of their 

requested funding or met their financing needs.

44

Zooming in on the 34% of businesses that sought financing, 

only 31% of these applicants received all of the funding 

they sought (down from 36% in 2020 and 51% in 2019).

45
26 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

363,460 active angel investors46

(8.6% increase from 2020)

69,060 entrepreneurial ventures received angel funding47

(7.1% increase from 2020) 

$29.1 billion in total angel investments48

(15.2% increase from 2020)

$421,675 average angel funding round49

(7.6% increase from 2020)

17.7 deals on average per angel group50

(down from 19.5 deals in 2020)

32% of seed capital came from angel investments 

(compared to 19% in 2020)51

4.4 jobs are created per angel investment

(up from 3.9 jobs per deal in 2020)52

1 in 4 chance of an entrepreneur securing an angel investment

(in 2021 the yield rate declined to 24.1% from 30.8% in 2020)53

26% of angel deals included an angel seat on the board 

of the portfolio company54

Over 80% of angel deals and investments are in seed 

and Series A rounds, where angels have the greatest impact55

Angel 

investment 

in 2021

Angel investors continue to be a significant source of 

early-stage capital

Angel investors are generally high-net-worth individuals who invest their own money directly in 

emerging businesses, typically in early funding rounds. Most angel investors are accredited investors, 

and many are current or former entrepreneurs themselves. 
ANNUAL REPORT: FISCAL YEAR 2022 | 27

What is happening with seed fundraising?

A pre-seed or seed round is typically a company’s first funding round. This round may include funding 

from friends and family, angel investors, or early-stage funds. Capital at this stage is often used for product 

development and market research.56Given the early stage, businesses in an angel or seed round are the furthest 

from the public market, insulating those companies from challenges arising in later stages of financing.57

In recent years, the number of seed rounds and seed firms have increased.

The number of seed rounds

in 2015-2019 reflected a

10Xincrease compared to the

five-year period a decade earlier.

58

The number of seed firms

in the U.S. in 2022 is estimated to exceed 

2,000

(in 2012, there were 112 active U.S. seed firms).

59

Deal Value ($B) Deal Count

*As of June 30, 2022

3,666

2018

$9.3B

4,086

2019

$10.0B

4,152

2020

$10.5B

5,436

2021

$17.2B

2022*

$10.0B

2,512

Seed activity remained strong, despite a slight drop in deal counts.

60

Early-stage businesses seeking pre-seed and seed funding are at 

different stages of product readiness.

61

Pre-Seed

Seed

No Product

38.5%

Alpha 

Prototype

15%

Beta 

Prototype

15%

No Product

25%

Beta 

Prototype

17%

Alpha 

Prototype

15%

Launched 

Product

31.5%

Launched 

Product

43%

of pre-seed companies raised funding in 2021 and 2022 

before launching a product (up from 8% in 2020).30% 62
28 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

In 2021, how long did it take to fund pre-seed and seed rounds?63

Pre-Seed

Seed

1-6 weeks

36%

7-12 weeks

26%

13-18 

weeks

15%

1-6 weeks

26%

7-12 weeks

25%

19-24 

weeks

10%

What are the average costs of seed fundraising?66

19.7%

Average percent of 

equity sold to investors

$28,800

Average closing costs

10.1%

Average amount of the equity 

allocated to the employee 

options pool

Since early 2022, pre-seed fundraising is becoming more competitive for 

founders in an investor-friendly market.

65

Founders

30% 

More pitch decks

sent per week

Investors

23%

Less time engaging

with pitch decks

The average pre-seed fundraising time increased to 15 weeks

in the first half of 2022 (compared to 13.5 weeks in 2021).

64

25+ 

weeks

13%

19-24 

weeks

15%

25+ 

weeks

17%

13-18 weeks

17%
ANNUAL REPORT: FISCAL YEAR 2022 | 29

While the average angel deal size in 2021 was $421,675,67 the vast 

majority of seed deals exceeded $1 million.

68

*As of June 30, 2022

$25M+

$10M-$25M

$5M-$10M

$1M-$5M

$500K-$1M

Under $500K

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2012

2013

2014

2015

2016

2017

2018

2019

2021

2020

2022*

Micro funds – funds raising $50 million or less – continue to strengthen 

seed activity.

69

Over 1,600 micro funds have closed since the beginning of 2018, including nearly 

200 in the first half of 2022.

70

From 2018 to 2021, micro funds raised between $4 and $5 billion annually 

(representing 4% of the deal value but 40% of the deal count).

71

of micro funds are raised by emerging managers.60+% 72

[T]he investment power of these small funds is multiplied by the 

networks they bring into new ecosystems. As more companies receive 

local investment, the growing cohort of companies will be able to draw 

capital from larger funds located in other areas. This itself is a major 

reason for needing local capital, as those firms will have a larger network 

and reach than many of the founders needing to raise capital.

KYLE STANFORD, PITCHBOOK73

“
30 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Many early-stage investors continue to fund companies within 

their region74

The percentage of angel investments remaining within their region 

continues to increase.

75

Seed funding has expanded into smaller ecosystems, but remains localized.

76 

The median distance between a company and 

a seed lead investor is 94 miles.

77

Northwest

95.0%

California

75.7%

Southwest

91.3%

Texas

75.6%

Great Plains

86.8%

Great Lakes

81.0%

Southeast

87.3%

New York

59.8%

Mid-Atlantic

79.6%

Northeast

89.5%

Access to capital is still fairly localized ... Entrepreneurs and fundraisers 

outside of top-tier funding hubs often still face high capital-raising hurdles, 

and it becomes increasingly difficult to raise capital the farther you are 

from a city hub. Despite their smaller share of total investment dollars, 

however, regions outside these top 10 funding hubs accounted for more 

than a third of the number of angel and seed deals, representing a broad 

base of startup environments and untapped potential.

 KENAN INSTITUTE OF PRIVATE ENTERPRISE78

“
ANNUAL REPORT: FISCAL YEAR 2022 | 31

Mature and Later-Stage 

Businesses 

C

ompanies within this segment of the market are generally growing and looking for larger amounts 

of capital that can fund operations of scale, ventures into new product lines, and preparation for 

public markets. Most often, their investors are institutional in nature, whether VC funds, private 

equity funds, or crossover investors from the public market.

VCs fund growth startups across the country but untapped 

markets remain

The below map illustrates the concentration of estimated VC deal value in 2021, with the number of 

VC deals indicated on each state.79

AK

12

AL

62

AR

33

AZ

174

CA

5,846

CO

487

DC

113

FL

576

DE

365

GA

273

HI

16

ID

42

IL

457

IN

156

KS

35

KY

59

LA

30

ME

29

MD

209

MI

166

MN

198

MO

113

MS

4

MT

35

NC

352

ND

5

NE

51

NH

40

NM

42

NJ

249 NV

116

NY

2,348

OH

197

OK

27

OR

168

PA

385

SC

63

RI

30

CT

188

MA

1,156

SD

11

TN

138

TX

891

UT

225 VA

284

WA

578

WI

94

WV

9

WY

31

PR

16

VI

3

IA

46

GU

Less than $100 MILLION $100 MILLION - $500 MILLION $500 MILLION - $1.5 BILLION

$1.5 BILLION - $20 BILLION No data available

VT

34

OVER $20 BILLION
32 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

While 73% of VC funding remains concentrated in the top three 

states,80VC-backed jobs are more broadly distributed across the US81

Less than 0.5%

0.5% - 1.5%

1.5% - 4%

4% - 10%

No data available

Over 10%

63% of VC-backed jobs

are outside the states of California, 

New York, and Massachusetts.

What is the typical VC cycle?82

How Venture 

Capital Works

Fundraising

VCs typically raise capital via 

capital commitments from their 

investors. The median size of a 

U.S. venture fund closed in 2021 

was $50 million.

83 A fund’s closing 

is the time when investors commit 

to an investment in the fund.

Re-investment

The fund ends when proceeds 

from all investments have been 

distributed to fund investors.

Many investors reinvest in new 

funds.New fundraises for US VC 

managers occur on average less 

than two and a half years apart.

88

Investment

VCs tend to invest in early-stage, 

high-growth companies. VC 

funds will often reserve three or 

four times the initial round of 

funding for follow-on financing.

84

Company Growth

VCs are often engaged advisors, 

receiving a board seat 44% of the 

time. The probability of receiving a 

board seat is higher in earlier rounds.

85

Exit

The life span of a VC fund is 

typically 10 years.

86 VCs generally 

exit their positions through an 

IPO or a merger or acquisition.

From 2014-2020, there were 

approximately 1,100 exits per year.

87
ANNUAL REPORT: FISCAL YEAR 2022 | 33

How do VCs fund businesses across their lifecycle?

Only one in a thousand

businesses receives VC funding.

89

For any business that receives VC funding, the business’s development will generally progress with its 

funding rounds.90

How is VC investment activity changing?

VC funding reached record highs in 2021. 2022 has brought a variety of changes and challenges 

affecting companies and investors in the U.S. VC ecosystem, including concerns about inflation, 

rising interest rates, and a slowdown in the U.S. public markets.91

2022 VC deal value and deal count are historically high, even as they 

may fall short of record-breaking highs reached in 2021.

92

Idea/Start up Development Growth Mature

Exit

$77.10

Seed

$4.36

Early-Stage VC 

$24.84

Later-Stage VC 

$43.40

Angel 

$1.43

Company 

Development

Average Deal

Size ($M)

Time

Cash Flow

Concept, 

business 

planning

Product 

development

Operational 

rollout

Growth Expansion

Deal Value ($B) Deal Count *As of June 30, 2022

11,900

2018

12,899

2019

12,578

2020

17,322

2021 2022*

$144B

7,841

10,866 11,543

10,389 11,303

8,061

9,932

$341B

$42B $50B $73B $86B $83B $89B

$145B $146B $167B

2012 2013 2014 2015 2016 2017
34 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Later-stage pre-money valuations may have plateaued after a 

rapid rise in 2021.

94

[M]any companies are buying time with bridge rounds, allowing them to extend 

their runways without a down round (a primary round at a lower valuation).

These companies are waiting until their fundamentals or wider market 

conditions improve enough to have their valuation expectations met in an IPO 

or primary financing round. LIAN CHANG, CARTA95

“

Later-stage investment volume peaked in 2021 but remains at 

heightened levels through the first half of 2022.

93

VC investments in later-stage businesses over the first half of 2022 are approximately equal to 

investments made over the course of the full year in each of 2018 and 2019.

*As of June 30, 2022

Early-Stage (Series A and B)

Angel & Seed

Later-Stage (Series C and Up)

2018 2019 2020 2021 2022*

$94B

$10B $40B

$236B

$87B

$19B

$113B

$11B $43B

$93B

$11B $42B

$93B

$11B $41B

$16

$14

$12

$10

$8

$6

$4

$2

$0

Median Pre-Money Valuation in Millions

Median Deal Value in Millions

$0 $20 $40 $60 $80 $100 $120

*As of June 30, 2022

2019

2020

2021

2022*

2020

2019

2021

2022*

Early-Stage Later-Stage
ANNUAL REPORT: FISCAL YEAR 2022 | 35

How is VC fundraising activity changing?

Billion dollar funds account for almost two-thirds of capital raised so far 

in 2022—already the second highest year on record for VC fundraising.

96

The below graph illustrates the amounts raised by VC funds of various sizes.

We expect emerging managers to have a more difficult time raising new funds 

over the near term as LPs rebalance their portfolio and allocate to known, or 

more established, investors and managers.

 PITCHBOOK97

“

The percentage of capital going to emerging managers has declined to 

a new decade low.

98

*As of June 30, 2022

$1B (or larger) Funds

$500M-$1B Funds

$250M-$500M Funds

$100M-$250M Funds

$50M-$100M Funds

Under $50M Funds

2018

$5B

$5B

$12B

$11B

$14B

$13B

2020

$5B

$5B

$25B

$21B

$14B

$15B

2019

$5B

$6B

$20B

$12B

$12B

$15B

2022*

$2B

$77B

$16B

$12B

2021

$6B

$7B

$47B

$30B

$25B

$23B

$3B

$10B

2022*

*As of June 30, 2022

Experienced Firm 

Fund Value ($B)

Emerging Firm 

Fund Value ($B)

Through the first 

six months of 2022, 

there has been nearly 

an 80/20 split in 

the capital going to 

established versus 

emerging managers.

99

$27B

$48B $27B

$31B $24B

$21B

$16B $20B

$11B

$10B

$7B

$95B

$91B $58B

$36B $40B $23B

$27B $32B

$27B

$12B

$16B

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

100%

80%

60%

40%

20%

0%
36 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

References from peers 21%

GP and fund economics 15%

Fund size 23%

How are LPs considering, meeting, and evaluating new fund managers? 

83% of LPs are open to or actively seeking new manager relationships.

100

While many LPs are seeking new manager relationships, network connections 

remain the dominant pathway LPs use to meet new fund managers.

101

Emerging managers by nature tend to have less 

extensive networks and often come from more diverse 

backgrounds than established managers. This can make 

it difficult for LPs to find new emerging managers when 

many rely on their networks.

102

Consultants 17%

Peers in network 79%

Self-generated 67%

Placement agents 52%

Cold outreach 27%

What are the top factors LPs consider in evaluating new fund managers?103

Strategy and process 83%

Background and reputation 77%

Prior fund performance 60%

Attributes such as 

background, reputation 

and prior fund performance 

typically benefit established 

managers, as compared to 

emerging managers.

104

Emerging managers often differentiate themselves through in-demand strategies or a particular 

focus on a region or demographic. As more managers enter the ecosystem, finding out-of-network 

connections may become increasingly challenging.105
ANNUAL REPORT: FISCAL YEAR 2022 | 37

What is the impact of nontraditional investors on mature and 

later-stage fundraising?

Over the last few years, nontraditional investors—generally firms and institutions not labeled as 

VCs—have increasingly crossed over from the public markets to invest in VC-backed companies.106

In recent years, the VC landscape has seen growth in deal sizes, 

valuations, and the number of mega-deals in which nontraditional 

investors participated.

107

*As of June 30, 2022

2018

$34B

2019

$37B

2020

$38B

2021

$69B

2022*

$37B

2,553

$107B

5,288

$273B

$110B $110B $129B

Traditional VC Investor Deal Value ($B)

Traditional VC Investor Deal Count Nontraditional VC Investor Deal Count

Nontraditional VC Investor Deal Value ($B)

3,730 4,036

4,131

6,157

8,170

8,863 8,447

11,165

Nontraditional investor participation in later-stage VC deals remains high.

108

In 2021, later-stage deals 

with nontraditional 

investor participation 

reached a median 

valuation of $200 

million, representing a 

2x growth over 2020.

109

*As of June 30, 2022

2018 2019 2020 2021 2022*

1,183

2,762

1,851

1,702

1,511

801

2,073

1,357 1,377 1,396

569

1,322

938 923 842

Angel & Seed Early-Stage VC Later-Stage VC

Deal Count with Nontraditional Investor Participation
38 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Portfolio company exits fuel reinvestments by LPs into new VC funds

Reduced distributions to LPs as a result of the slowdown in the IPO market may disproportionately affect 

emerging fund managers, as LPs may be more inclined to allocate a now smaller pool of available capital 

to established managers.110Likewise, lower public market valuations could lead to an overweighting in the 

portfolios of LPs to private market investments.111

Venture-backed exit activity in the first half of 2022 has seen a significant 

decline in valuations as well as deal counts from 2021—reverting to 2017 and 

2018 levels—with public listings leading the downturn.

112

A

29%

Seed

38%

B

16%

C

9%

D+

7%

Angel

1%

In 2021, Series B and earlier 

companies accounted for

84%

of acquisition targets.

113

In the first half of 2022, 

there were 

22 VC-backed IPOs

In 2021, there were 

183 VC-backed IPOs

2017 2018 2019 2020 2021 2022*

*As of June 30, 2022

Acquisitions

Deal Count

Buyouts

Public Listings

633

$68B

$20B

$500M

$28B

$96B

1,806

$14B

$667B

$69B

$12B

$244B

$64B

$7B

$198B

$62B

$8B

$54B

$41B

$10B

$51B

1,200

1,250 1,215

1,049
ANNUAL REPORT: FISCAL YEAR 2022 | 39

Small Public Companies

C

ompanies can access broad pools of investors when they conduct public offerings. This allows 

them to raise large amounts of capital to fund activities, such as research and development, 

capital expenditures, or debt service. Public offerings also provide liquidity to early-stage 

investors and employees. 

How have U.S. exchange-listed companies changed over time?

The number of small exchange-listed companies114 has drastically declined over the 

last several decades, while the number of large exchange-listed companies continues to increase.

115

*As of June 30, 2022

1982

897

Companies

4,144

Companies

1992

1,520

Companies

4,313

Companies

2002

2,034

Companies

3,140

Companies

2012

2,209

Companies

1,415

Companies

2022*

2,647

Companies

1,587

Companies

Small Exchange-Listed 

Companies

Large Exchange-Listed 

Companies
40 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

The aggregate market capitalization of small exchange-listed companies has faced an even 

steeper decline as a proportion of the overall market—with the percentage falling by half or more 

each decade.

116

How are the dynamics changing for companies going public? 

Much of the IPO market growth in 2020-2021 and decline in 2022 related to IPOs by large 

companies and SPAC offerings. The proceeds raised in an IPO by U.S. small companies consistently 

remain a very small fraction of the IPO market.

117

*As of June 30, 2022

$184B $243B $211B $127B $149B

$1,228B $3,876B $9,647B $15,594B $37,572B

1982 1992 2002 2012 2022*

20%

15%

10%

5%

0%

100%

95%

Small Exchange-Listed Companies Large Exchange-Listed Companies

13%

5.9%

2.1% 0.8% 0.4%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1

2019 2020

IPOs by Small Companies SPAC Offerings

Q2 Q2

2021 2022

$3B

$190M $512M $115M $170M $220M $596M $638M $355M $683M $732M $238M $217M

$3B

$7B

$31B

$34B

$86B

$12B

$16B

$29B

$9B

$2B

$10B

$16B

$31B $31B

$45B $43B

$29B

$34B

$4B

$2B $6B

$12B

IPOs by Large Companies

$3B
ANNUAL REPORT: FISCAL YEAR 2022 | 41

The significant decline in the number of IPOs by large companies and 

SPAC offerings has increased how much U.S. small companies account 

for in the overall IPO market.

118

How has venture capital affected the public markets?119

On average, public 

companies that received VC 

funding are more research 

and development (R&D)

intensive and grow faster—

by 4.9 percentage points in 

employment—than public 

companies that were not 

VC-backed.

120

50%

of IPOs 

77%

by market cap

50%

of revenues

85% of net 

income

92%

of R&D 

spending 

93% of patent value/ 

81% of the number of 

patents

Among public 

companies that had 

an IPO after 1978, 

VC-backed

companies 

account for:

610

58%

11% 11%

26%

56%

33%

35%

56%

59%

33%

32%

55%

11%

53%

27%

14%

H2 H1 H2 H1 H2 H1

IPOs by Small Companies SPAC Offerings IPOs by Large Companies

121 111

384

456

132

2019 2020 2021 2022

7% 5%
42 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Deeper Dive into Small Public Companies 

While it is easy to group all public companies together, their experiences and challenges in the public 

markets differ considerably. The unique challenges that small public companies face tend to receive 

less coverage than those faced by larger companies. 

How has the number of smaller reporting companies changed since 2011? 

Despite the SEC’s 2018 expanded definition of smaller reporting companies (SRCs),121 the number 

of SRCs has declined, although that number as a percentage of all reporting companies has risen 

slightly.122 

In 2011, 

SRCs filed 

3,750

annual reports

In 2021, 

SRCs filed 

3,289

annual reports

42%

of all 

annual filers

46%

of all 

annual filers

How are mergers and acquisitions affecting the number of small public 

companies?123

How are U.S. small public companies raising capital through registered 

equity offerings?124

of public company 

acquisitions involved 

small-cap and 

micro-cap companies.

68%

Small-cap and 

micro-cap companies 

are often easy targets 

for large companies 

to acquire.

Total Proceeds Number of Offerings

85

181

83

102

134

$3.2B $1.4B

62

35

116 113

130

61

86

$1.9B $3.1B $1.8B $2.9B $4.3B $7.1B $10.2B $4.2B $6.4B $10.6B

348 offering 

average proceeds $28M

507 offering 

average proceeds $51M

333 offering 

average proceeds $65M

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1

2019 2020

Q2 Q2

2021 2022
ANNUAL REPORT: FISCAL YEAR 2022 | 43

Several industries had significant changes among equity offerings by 

U.S. small public companies.

125

$3.0B

$1.5B

$2.4B

$1.2B

$1.3B

$0.5B

$0.3B

$0.4B

$0.1B

$0.3B

$0.5B

$0.2B

Health Care

Business Services

Technology

Real Estate

Banking and Financial Services

Manufacturing

July 2020–June 2021 July 2021–June 2022

How are compliance costs affecting small public companies? 

Compliance with regulatory requirements often include fixed costs that are not scalable for small 

public companies.126 Some of those costs have disproportionally increased for smaller reporting 

companies. 127

2021 2022 Year-over-year 

trend

Percent 

change

Large accelerated filer $1,328,300 $1,450,800 9%

Accelerated filer (excluding SRCs) $1,221,900 $1,232,400 1%

Emerging growth company $1,408,300 $1,370,200 -3%

Smaller reporting company $1,126,000 $1,433,600 27%

Average Internal Annual Sarbanes-Oxley Act Compliance Costs128
44 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

The amount of research coverage and the number of analysts covering 

a company often correlate with a company’s market capitalization.

129

of small public 

companies received 

research coverage.

of small public 

companies are held by 

institutional investors

(up from 45% in 2020).

of large public 

companies received 

research coverage.

of large public 

companies are held by 

institutional investors

(consistent with 2020).

132

60%

47%

90%

66%

Small public companies are only covered by 

an average of two analyst firms.

Less research coverage equates to additional liquidity challenges for smaller companies.

Large public companies are covered by an 

average of nine analyst firms.

130

Small public companies and companies that are not able to obtain 

research coverage have lower levels of institutional ownership.

131
ANNUAL REPORT: FISCAL YEAR 2022 | 45

of small businesses 

are women-owned, 

representing 13.5 million 

businesses.133

43.2%

of employer small 

businesses are womenowned, representing

2 million businesses.134

36.4%

of VC deals in 2021 were 

with women-founded 

companies, representing 

4,430 deals.135

26.4%

of new founders that 

created businesses and 

received VC funding in 

2021 were women.136

14%

Women Businesses Owners 

and Their Investors

Women-Owned Business Formation and Ownership

The portion of businesses owned by women decreases as the businesses move through the life cycle stages.

By share of employer firms, women owners are underrepresented in 

every demographic group.

137

The gender gap in new entrepreneurs has been persistent over the past 

25 years and continued in 2021.

138

out of 10,000 women became 

new entrepreneurs, compared 28to 45 out of 10,000 men.

64.7%

20.5%

35.2%

14.7%

56.6%

8.2%

63.6%

2.8%

33.6%

28.8%

13.7%

57.5%

62.5%

11.6%

25.9%

White African American/

Black

Native American and 

Alaska Native

Asian American/

Pacific Islander

Hispanic/Latino

Women-owned Equally-owned Men-owned
46 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Women founders remain resilient but feel less supported than ever.

The percentage of women founders that feel supported by the entrepreneurial community has 

drastically declined.139

48%

in 2019

50%

in 2020

36%

in 2021

60% of female founders

feel held back by their gender.

4% of male founders feel 

held back by their gender.

140

During the pandemic there were a number of women who left the 

workforce to start their own businesses—some out of necessity, some 

for the need of flexibility, being able to do remote work from home... 

what’s going to be important are the resources that support that 

continued growth.

TENE DOLPHIN, EXECUTIVE DIRECTOR OF THE NATIONAL WOMEN’S BUSINESS COUNCIL141

“
ANNUAL REPORT: FISCAL YEAR 2022 | 47

Capital Raising Trends for Women-Owned Businesses

Both the number of women entrepreneurs seeking angel capital and 

their investment yield rate declined year over year.

Women constituted 

28.6%

of entrepreneurs seeking angel capital in 2021 

(down from 33.6% in 2020).

142

Angel investors invested in 

19.7% 

of those investment opportunities brought to 

their attention (notably down from 28.1% in

2020, but mirroring the overall market decline 

from 30.8% in 2020 to 24.1% in 2021).

143

While the amount of VC investment has risen significantly, the share of 

funding to women founders continues to lag.

In 2021, women founders and co-founders raised a record.

$64.6 billion in venture funding.

144

Funding in the first half of 2022 remained historically high at $26.3 billion.

145

VC deal values and deal counts have trended up in recent years—peaking in 2021.146

Deals with men and women 

co-founders

Deals with women-only founders Deals with men-only founders

$276.9B

$140.4B

$121.5B $117.9B

$20.0B

$3.2B $3.8B $3.4B $7.8B $2.8B

$24.4B $23.3B

$56.8B

$23.5B

$117.9B

2018 2019 2020 2021 2022*

Deal Value

8,588

632 713

2,680

9,152

3,034

8,803

3,011

764

4,215

12,030

5,518

1,823

500

2018 2019 2020 2021 2022*

Deal Count

*As of June 30, 2022

1,077
48 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Despite the record amount raised in 2021, women founders’ share of VC funding remains a fraction 

of the overall capital raised.147

1.7% 2.6%

13.3%

18.5%

14.3%

2.3%

17.4% 17.2%

14.6% 16.9%

2.7% 2.1% 2.4% 2.0%

2016 2017 2018 2019 2020 2021 2022*

*As of June 30, 2022

Deals with women-only founders Deals with women and men founders

In 2021, women-only led teams received a declining percentage of overall invested capital in each 

progressive funding round.148

Seed 5%

84%

11%

Series 

A

4%

86%

10%

Series 

B

5%

87%

8%

Series 

C

4%

91%

5%

Series 

D

6%

90%

4%

Deals with women-only founders Deals with women and men founders Deals with men-only founders

Some major metro areas have seen significant surges in capital raising 

for women founders.

Amounts raised since 2020 as a percentage of aggregate amounts raised 2008–2019.149

Phoenix

164%

Denver

100%

Austin

161%

DallasFort Worth

158%

St. Louis

187%

Minneapolis

125% Ann Arbor

118%

Washington, 

DC

133%

Santa 

Barbara

129%

San 

Francisco

102%
ANNUAL REPORT: FISCAL YEAR 2022 | 49

Despite more investor meetings for all-women teams, all-men and 

mixed teams continue to get more funding.

150 

All-women teams had the 

most investor meetings in 

2021 after averaging the 

fewest in 2020.

All-women teams with minority members had 57% more 

meetings with VC investors in 2021 than in 2020, but 

raised less money than any other demographic.

151

However, all-women teams 

raised less per meeting

($32,600) than all-men 

($46,500) or mixed ($39,500) 

teams.

VC investors more heavily scrutinized the team, traction, and business 

model in pitch decks by all-women teams, compared to all-men teams.

All-women teams experienced:152

76% more time

spent on the business 

traction section.

130% more time spent 

on the team slide. For 

all-men teams, this 

was one of the least 

important slides.

43% more time spent 

on the business model.

Less time spent 

on the product slide.

For all-men teams, the 

most time was spent on 

this slide.

I hope a statistic like this prompts investors to examine their own 

biases more closely. For many investors, this extra scrutiny on the 

team slide is coming from a place of skepticism. They’re wondering if a 

particular all-female team can really build a product and whether they 

have the right experience to do so. Female founders face a higher bar 

for questions like these, especially in male-dominated sectors.

ADRIANNA SAMANIEGO, FEMALE FOUNDERS FUND153

“
50 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Executive teams with women produce better financial returns, exhibit 

more innovation, and outperform on time to exit.

154

Executive teams with women:

are 21% more likely to be 

profitable than all-men 

teams, and

For example, women-led technology companies were 

more capital-efficient, achieving 35% higher ROI and, 

when venture-backed, achieved 12% higher revenues than 

startups run by men.

155

correlated with increased

innovation. Diverse women-led 

teams are more likely to capture

new market share.

2022 is on pace to be the 12th straight year that women-founded companies are exiting and 

returning capital to investors faster than the overall market:156

YEARS

7.2 for women-founded 

companies

YEARS

8.1

for all VC-backed VS. companies.

Firms that retain female managers by introducing policies that balance 

work and family, and that actively hire more female executives have 

superior performances than those firms that do not.

CHENGWEI LIU, ET AL157

“
ANNUAL REPORT: FISCAL YEAR 2022 | 51

Women in Leadership Roles

Women remain underrepresented in leadership roles among VC-backed 

companies.

158

Percent of women employees, 2016-2021

60%

Entry-level

40%

Mid-level

37%

Senior

39%

VP

24%

C-suite

While underrepresented, the share of women in board roles at 

VC-backed companies continues to increase.

159

7%

11%

40%

51%

61%

19%

20%

27%

Women-held board seats

At least one woman on board

Independent seats held by women

2019 2020 2021

14%

Women-led IPOs increased in 2021, but remain a small share of the 

overall market.

160

IPOs with a woman founderor co-founder

more than doubled to 48 in 2021 (up from 22 in 2020), 

but represented only 16% of all public listings last year.
52 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Board gender diversity among small public companies continues to 

improve, but progress is slowing.

161

Women held

28%

of the Russell 3000

board seats

(up from 18% in 

2018).

40%

of new directors

in the first half of 

2022 were women.

The number

of women-held 

seats increased

2.4% 

from 2021 

(down from 3% 

in 2020).

In the first half 

of 2022, the share 

of new seats going 

to women declined

17%.

Trends in Women Investors in Small Businesses

2021 was a record high for active women angel investors.

162

33.6% of angel investors in 2021 were 

women (an increase from 29.5% in 2020).

163

of women angel investors were active investors, compared to 

just 43.7% of angels in the overall market.61.4% 164

Fundraising by women-founded VC and micro funds in 2021 outpaced 

prior years.

165

Total Funds Raised Number of Firms

*As of Sept. 30, 2021

67

2018

92

2019

37

2020

46

2021*

42 38

46

63

12

28

$7.0B $0.4B $1.3B $2.5B $3.8B $3.3B $4.8B $4.7B $6.1B $4.4B

2012 2013 2014 2015 2016 2017
ANNUAL REPORT: FISCAL YEAR 2022 | 53

Women remain underrepresented among VC and micro fund 

checkwriters.

166

Women Checkwriters

13%

15%

9%

12%

2018 2019 2020 2021

New Checkwriters

2018 2019 2020 2021

30%

70%

49%

51%

43%

57%

34%

66%

Women Men

Breakdown of Checkwriters at VC Firms

40% of VC firms 

have a woman 

checkwriter

All men

 59.6%

All women 3.8%

Majority women 7.5%

Majority men 29.1%

Women-led funds facilitate greater funding of diverse founders.

Women VC partners were 

3x more likely to invest

in startups with women 

CEOs and often yielded 

superior returns.

167

Promoting and recruiting 

women checkwriters

can open doors for more 

women founders and 

diversify portfolios.

168

When women and minorities are underrepresented as investment 

partners, our economy reaps just a fraction of the full potential that 

could be gained from companies founded by these communities.

IMANI AUGUSTUS, DIRECTOR OF THE ALLIANCE FOR ENTREPRENEURIAL EQUITY169

“
54 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Minority-Owned Businesses 

and Their Investors 

Precursors to Accessing Capital

Inequalities across demographic groups impact the starting line for 

many entrepreneurs.

170

Entrepreneurs who are African American/Black or Hispanic/Latino face additional barriers to entry 

because the increasing wealth gap affects their ability to tap personal assets as a funding source.171

White Other (including multi-race, Asian 

American/Pacific Islander, and 

Native American /Alaska Native)

1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

Hispanic/Latino African American/Black

$149 $149 $141

$73 $100 $110

$166

$114 $89 $104 $82

$104 $138 $135 $171

$231

$129 $123

$194 $192

$81 $99

$424

$532

$705

$756

$835

$743 $747

$961

$953

$404

$463

$345

$424

$551

$505

$710

$608 $638

$752

$1,039

$361 $371

Average Household Net Worth (in thousands)

19%

30%

25%

25%

Asian American

11%

25%

29%

35%

White

5%

19%

32%

44%

Hispanic/Latino

5%

15%

27%

54%

African American/

Black

Over $200,000

$100,000–$200,000

$50,000–$100,000

Under $50,000

Disparities in income distribution add additional hurdles to overcome.172
ANNUAL REPORT: FISCAL YEAR 2022 | 55

Minority entrepreneurs are less likely to have access to credit.

Hispanic/Latino and African American/Black households are more likely to be unbanked, meaning 

that no one in the household has a checking or savings account at a bank or credit union.173

Less access to traditional financial institutions means greater reliance on alternative financial 

services, like check cashing counters and payday lenders, which can adversely affect financial health 

and ability to build a credit history.174 A person with limited credit history or a lower credit score is 

less likely to qualify for personal and business loans.

Hispanic/Latino 11% 18% 71%

African American/Black 13% 27% 59%

Unbanked Underbanked Fully Banked

Asian American/Pacific Islander 6% 92%

2%

White 10% 87%

3%

Hispanic/Latino

African American/Black

All Most/Some None

Asian American

43% 31% 27%

28%

41%

41%

53%

32%

35%

19%

27%

24%

White

714

Poor

(<580)

Fair

(580-669)

Good

(670-739)

Very Good

(740-799)

Exceptional

(800+)

Average credit score in the U.S.175

745 734

701 677

Asian American/Pacific Islander

Hispanic/Latino African American/Black

White

Average Credit Score by Race and Ethnicity176

Minority entrepreneurs are less likely than White entrepreneurs to receive all the financing they seek, 

even when comparing applicants with similarly low-credit-risk.177
56 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Business Formation and Ownership Trends

Entrepreneurial activity remains high across minority groups.

178

17.5%

27.9%

15.7%

24.8%

13.0%

12.5%

12.4%

17.7%

17.6%

22.6%

African American/Black

Hispanic/Latino

White

Asian American

Other

Current Entrepreneurship Entrepreneurship Planning

Minority entrepreneurs perceive entrepreneurship positively, but further 

resources are needed to support minority businesses’ growth.

179

African American/Black

and Hispanic/Latino adults intend

to create new businesses

at 2X the rate of White adults.

1/3 of working age

African American/Black

adults are starting or running 

a new business.

White adults own 

established businesses180

at almost 2X the rate as 

African American/Black 

and Hispanic/Latino adults.

Achieving equity in entrepreneurship has the potential to unleash a new 

era of businesses, hiring, and generational wealth.”

 MARC H. MORIAL, PRESIDENT AND CEO OF THE NATIONAL URBAN LEAGUE

AND JON COWAN, PRESIDENT OF THIRD WAY181

“
ANNUAL REPORT: FISCAL YEAR 2022 | 57

The discrepancies in viewing times that correlate with less funding 

suggest to me that investors have a harder time believing facts and 

statements from underrepresented founders within their pitch decks.

The pre-seed round is where we’re seeing these biases emerge strongly 

and where founders are being overlooked the most.”

DARREL FRATER, THECLUB APP AND VISIBLE HAND VC183

“

Capital Raising Trends

VC investors more heavily scrutinized particular deck slides of teams 

with minority members compared to all-White teams.

Teams with minority members experienced:182

67% more time

spent on the 

market size section.

78% more time 

spent on the 

competition slide.

For all-White teams, 

this was one of the least 

important slides.

Less time 

spent on the

business model.

For all-White teams, 

this was the most 

important slide.

20% more time 

spent on the

product slide.

At the pre-seed stage, the funding process often requires more effort 

and more meetings for teams with minority members.

Average number of investor meetings per pre-seed fundraising:184

MEETINGS

37

All men

MEETINGS

37

Women and men

MEETINGS

35

All women

MEETINGS

45

All men

MEETINGS

71

Women and men

MEETINGS

74

All women

All-White teams Teams with Minority Members
58 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

The number of minority entrepreneurs seeking angel capital is up, but 

underrepresentation persists.

Minorities constituted 

12.8%

of entrepreneurs seeking angel capital in 2021 

(a robust increase from 5.3% in 2020

and 9.3% in 2019).

185

Angel investors invested in 

30.5% 

of those investment opportunities 

brought to their attention 

(down slightly from 33.0% in 2020).

186

Funding for seed and early-stage funding remains inequitably 

distributed as reflected in average amounts raised in 2021, broken 

down by race and ethnicity.

187

Series A Average Amount Raised

Percent of Pre-Seed, Seed, 

and Series A Deal Count

Pre-seed and Seed Average Amount Raised

African 

American/Black

$0.4M

$4.1M

Hispanic/Latino

$1.7M

$2.1M

Native American/ 

Hawaiian/Pacific 

Islander

$5.1M

$0.6M

Asian American

$1.4M

$14.9M

Other

$4.7M

$15.6M

White

$19.3M

$3.0M

23% 24%

2%

5%

11%

35%

The inequitable distribution can also be seen across the share of seed 

and early-stage funding in 2021, broken down by race and ethnicity.

188

46.6% 26.4% 23.2% 1.9% 1.2% 0.7%

White Other Asian American Hispanic/Latino African American/

Black

Native American/ 

Hawaiian/Pacific 

Islander
ANNUAL REPORT: FISCAL YEAR 2022 | 59

LGBTQ+ founders similarly report challenges accessing capital.

Entrepreneurs with disabilities also face obstacles accessing capital.

192

Nearly 3 out of 4

entrepreneurs say

LGBTQ+ entrepreneurs

face more challenges

than non-LGBTQ+

owned businesses.

189

93% of LGBTQ+ 

entrepreneurs say 

access to capital

is limiting their

growth potential.

190

46% of LGBTQ+ 

entrepreneurs received

none of the financing

that they applied for

compared to 34% of

non-LGBTQ+ businesses.

191

of the adult population 

has a disability

(about 40 million

people).

193

15%

1.8 million of them 

own a small business.

194

About 1 out of 4 of those 

entrepreneurs did not apply 

for credit because they did 

not think they would be 

approved.

195

OPEN

A massive obstacle disabled founders face is access to capital, as is the 

case for all underestimated entrepreneurs. Women, Black, and Latino 

entrepreneurs each receive less than 3% of venture capital funding...

However, when it comes to disabled entrepreneurs, the data on funding 

doesn’t even exist.”

DIEGO MARISCAL, FOUNDER AND CEO OF 2GETHER-INTERNATIONAL196

“
60 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Minority Investors and Allies

Minorities among angel investors have decreased for the last three years.

of angel investors in 2021 were minorities

(down from 5.3% in 2020 and 7% in 2019).4.1% 197

of the decision-making roles at 

the top U.S.VC firms are held by 

White men (down from nearly 

64% of such roles in 2018).

200

53% of African American/Black VC 

partners launched funds within 

the past two years barely keeping 

pace with the overall growth.201

27%

of VC investment partners are 

Hispanic/Latino.2% 202

Minorities remain vastly underrepresented among asset managers, but 

they are more likely to fund minority founders.

of the total assets under management in the U.S. are in 

minority-owned funds, but they are 

3x to 4x more likely than non-minority-owned funds to

fund minority entrepreneurs.

198

1.4%

The representation of minority partners in the VC industry has remained 

steadily low—although the number of emerging funds launched by African 

American/Black partners has grown by record amounts in recent years.

199

Since 2018, the number of African 

American/Black partners who 

make investment decisions and 

lead deals at top U.S. VC firms 

increased 3.5 times (to over two 

dozen from 7).

203

3.5X

of Hispanic/Latino VC investment 

professionals work at smaller VC 

funds.

204

59%

African American/Black-led 

first-time funds were nearly half the 

size of the first-time funds raised by 

everyone else (averaging $30.5 million 

compared to $57 million).

205

Follow-on funds raised by African 1/2

American/Black-led and Hispanic/

Latino-led funds are 3X more 

sensitive to past performance—with 

investors more harshly punishing 

poor performance.

206

3X
ANNUAL REPORT: FISCAL YEAR 2022 | 61

In addition to investing in minority entrepreneurs at a higher rate, minorityled VC funds can create ripple effects within the investor community.

of African American/Black

VC partners are actively 

mentoring other investors

in the Black VC community.

207

56%

25.3% of funds that allocate part of their 

capital to diversity, equity and inclusion (DEI) or 

minority investments had a minority VC partner, 

compared to 5.9% of funds that don’t have a DEI 

or minority investment allocation.

208

Public Company Board Leadership

Diversity has increased on public company boards.

209

Minority representation on public company boards still lags behind the 

overall population.

of small public company board members in 2022 are Hispanic/Latino (3%), 

African American/Black (6%), or Asian American/Pacific Islander (7%), an 

aggregate increase from 11% in 2020.16% 210

11%

16%

29%

55%

62%

90%

Percentage of board seats 

held by minority directors

Two or more minority directors

At least one minority director

2022

2020
62 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Natural Disaster Areas

How do natural disasters affect small businesses?

of small businesses were 

affected by natural disasters.

211

12%

2/3 of small businesses that 

had disaster-related losses

were forced to close, at least 

temporarily.

212

OPEN

CLOSED CLOSED $$

The share of small businesses 

experiencing disaster-related 

losses doubled (from 7% in 

2019 to 14% in 2021).

213

Natural disasters affect communities and their small businesses 

across the country.

Between October 1, 2021 and September 30, 2022, there were 18 natural disaster events with 

losses exceeding $1 billion.214 The total estimated natural disaster-related losses in the U.S. exceeded 

$55 billion.215
ANNUAL REPORT: FISCAL YEAR 2022 | 63

Capital from investors remains a small portion of funding

Similar to all small and emerging businesses, those affected by natural disasters used personal funds 

(66%), grants and other funds that do not need to be repaid (64%), and cash reserves (57%) before 

seeking external capital (with repayment) (53%).216 Of those that applied for external capital:

sought 

equity financing 

(compared to 6% of small businesses 

not affected).7% 217

How does the percentage of the population affected by natural 

disasters compare to the amount of capital being raised?

of the U.S. population218 lives in an area that was affected by a 

natural disaster during the three years ending June 30, 2022.37% 219

As a percentage of capital raised nationwide, capital raised by 

businesses in areas affected by natural disasters varied under different 

offering pathways.

220

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Percentage of Capital Raised Over 3 Years

Regulation D

U.S. 

population in 

areas affected 

by natural 

disasters

$1.4T

total

$1.3B

total

$280M

total

$57B

total

Regulation A Regulation 

Crowdfunding

Registered 

Equity Offerings 

by Small Public 

Companies
64 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Rural Communities

Small businesses drive employment in rural areas, despite the 

declining number of new small businesses

Small businesses are critical to rural communities, employing well over half of workers in rural 

areas.221

Workers 

employed 

in small 

businesses

62%

Urban Areas 47%

Rural Areas

Since 2008, rural small business creation has fallen below the 

replacement level.

222

1978 1981 1984 1987 1990 1999 1996 1999 2002 2005 2008 2011 2014 2017 2020

-10,000

-5,000

5,000

10,000

0

Net Difference between Firm Starts and Closures in Nonmetropolitan Areas223
ANNUAL REPORT: FISCAL YEAR 2022 | 65

Rural small businesses are located coast to coast, with the majority 

in the middle of the country.

225 The below map illustrates the distribution of rural 

businesses across the U.S. by region, as well as the percentage of businesses within each region that 

are rural. 

Pacific

12% of U.S. Rural Small Businesses

10% of Small Businesses in the Region

East South Central

7% of U.S. Rural Small Businesses

19% of Small Businesses in the Region

South Atlantic 

13% of U.S. Rural 

Small Businesses

9% of Small Businesses 

in the Region

Middle Atlantic 

4% of U.S. Rural 

Small Businesses

4% of Small Businesses 

in the Region

Mountain

13% of U.S. Rural Small Businesses

23% of Small Businesses in the Region

West North Central

17% of U.S. Rural Small Businesses

36% of Small Businesses in the Region

New England

2% of U.S. Rural Small Businesses

5% of Small Businesses in the Region

East North Central

18% of U.S. Rural Small Businesses

18% of Small Businesses in the Region

West South Central

14% of U.S. Rural Small Businesses

19% of Small Businesses in the Region

One element that is at the heart of virtually every development 

strategy that works well in rural communities is entrepreneurship.

Every entrepreneur matters in rural communities—from the creative, 

home-based business, to the owner of a small Main Street business, 

to the larger potential growth company.”

DEB MARTIN, GREAT LAKES COMMUNITY ACTION PARTNERSHIP224

“
66 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Small banks remain the primary source of capital for rural small 

businesses, despite the decline in small banks and small business 

lending

Access to capital is a direct driver in building rural 

entrepreneurial ecosystems226

Rural Entrepreneurial

Ecosystems

Inclusive Tech 

Culture-Building

Access to 

Digital Jobs

Scalable Tech 

Entrepreneurship 

Support and Incubation

Digital Workforce

Development and Support

Access to Capital

of rural 

small businesses use 

small banks as their 

primary source of 

funding.

227

59%

The smallest banks

(up to $300M in assets) are 

the only banking segment

that is smaller than it was 

in 1988.

228

The number of small business 

loansdeclined23%

from 2008 to 2020

(despite an 11% increase from 

2019 to 2020).

229

Capital from investors remains a very small portion of funding

of rural small businesses seeking 

external capital sought 

equity financing

(compared to 7% of urban small businesses).4% 230
ANNUAL REPORT: FISCAL YEAR 2022 | 67

However, businesses in rural areas233 raised a notably smaller portion of overall capital relative to the 

rural share of population during the three years ending June 30, 2022:

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

Percentage of Capital Raised Over 3 Years

Regulation D

U.S. 

population in 

rural areas

$21B

total

$80M

total

$29M

total

$810M

total

Regulation A Regulation 

Crowdfunding

Registered 

Equity Offerings 

by Small Public 

Companies

How does the rural population compare to the amount of capital 

being raised?

18%

of the U.S. population 

lives in rural areas.

231

16%

of small employer firms are 

located in rural areas.

232
68 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION
ANNUAL REPORT: FISCAL YEAR 2022 | 69

Policy Recommendations

T

he Office developed the following policy recommendations for Congress and the Commission 

based on feedback from small businesses and their investors about our capital raising rules. We 

have distilled their feedback into five key areas for action to address the most significant issues 

raised.

We recognize that for any complex issue, including challenges surrounding capital formation, there 

are a multitude of potential approaches, and indeed we may need to combine multiple approaches 

to arrive at an effective solution. For each recommendation, we include background context, 

particular impact on demographic groups, notes on related developments, and our proposed 

solution.

We welcome further engagement by Congress and the Commission to implement these solutions so 

that entrepreneurs and their investors together can bring innovations to market.

On August 27, 2022, our Office and the Fort Worth Regional Office joined the University of Houston C.T. Bauer College 

of Business for a series of discussions with entrepreneurs on their successes and challenges in starting and growing 

their businesses and accessing funding.
70 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Background Context

All businesses need capital to create jobs, grow, and innovate. Many entrepreneurs 

need support to access that essential capital.234

Throughout the last fiscal year, we met in-person and virtually with entrepreneurs 

and investors from across the country. We heard countless examples of hard work 

and perseverance that allowed small businesses and their investors to overcome the 

challenges brought by the COVID-19 pandemic. We met with many founders who 

have been able to fund their operations using personal savings, credit cards, retained 

business earnings, or grants. We also talked with many small businesses owners for 

whom those non-dilutive funding sources were unavailable or insufficient and who 

were looking to investors to help finance their operations and development. 

Many of the entrepreneurs we met—no matter how business savvy or 

technologically sophisticated—noted that the capital raising rules are complex and 

expressed the need for accessible resources at every stage to help them navigate the 

capital raising process.

Demographic Impacts

Even as the regulatory pathways to raising capital have expanded in recent years, the 

complexity of our regulatory framework remains. In particular, women and minority 

entrepreneurs face an uneven playing field when navigating that complexity, as they 

do not have access to the same networks, experienced mentors and advisors, or 

supportive entrepreneurial communities as their counterparts.235

Related Developments

Over the last year, the Commission has supported our partnership with other SEC 

offices and divisions to launch the Capital Raising Hub, a centralized portal of 

educational resources for small businesses and their investors. The Capital Raising 

Hub provides resources for each phase of the capital raising journey, and we 

continue to expand and update the resources based on feedback we receive through 

our outreach efforts. 

One of the most popular resources within the Capital Raising Hub is our Building 

Blocks suite of educational materials, akin to “one-pagers” that break down 

fundamental securities law concepts into plain language. Also popular are the 

Cutting through the Jargon glossary, which demystifies common terminology, and 

Entrepreneurs and their investors need accessible tools and 

educational resources to navigate complex securities laws.
ANNUAL REPORT: FISCAL YEAR 2022 | 71

the Navigate your Options tool, a “choose-your-own-adventure” style resource 

to help users navigate through the capital raising options.

Proposed Solution

Looking forward, we will continue to engage with diverse audiences of small 

businesses, investors, and other thought leaders in the market to promote and 

improve our educational resources. We also will continue to seek feedback and 

welcome suggestions for future materials.

The Commission’s continued support of our efforts in this area is critical to 

ensuring that entrepreneurs and their investors, at every stage, have access to 

tools and educational resources to understand and comply with the securities 

laws in order to access our capital markets effectively.

In October 2021, the Office joined Wyoming founders, investors, and other small business leaders for an engaging 

conversation about capital raising for early-stage companies. One participant noted the importance of accessible 

resources: “Entrepreneurs just want to run their business. We need to make the process simpler by using normal 

language that people use in their living rooms.”
72 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Targeted regulatory changes can improve access to capital.

Background Context

As we engage with small businesses, investors, and other thought leaders, many 

share details about successes in the capital raising process as well as areas of 

challenges. Overwhelmingly, small businesses and investors alike tell us that 

Regulation D works well for businesses that have access to accredited investors. 

Many small businesses across the country, however, do not have pre-existing 

accredited investor networks—often resulting in additional layers of challenges and 

hurdles when seeking to capital raise. Market participants have identified a number 

of targeted regulatory changes to improve the capital raising process. 

Demographic Impacts

Data highlighted in this report shows the dismal proportion of capital raised by 

small businesses founded by women and minority entrepreneurs. This is the case 

at all lifecycle stages—from startups through later-stage businesses seeking venture 

capital—leaving these businesses financially constrained and unable to reach their 

full potential.

Diversifying the pool of investors and capital allocators facilitates greater funding 

of diverse founders. Women VC partners were three times more likely than men 

VC partners to invest in women entrepreneurs.237Minority-owned funds were three 

to four times more likely than non-minority-owned funds to invest in businesses 

founded by minority entrepreneurs.238Therefore, policies that have a negative impact 

on underrepresented investors further impede investment in the next generation of 

diverse innovators working to grow their companies.239

[Y]ou find that when you have a thriving capital market, you’ve got 

jobs." ARMEER KENCHEN, SMALL BUSINESS CREDIT INITIATIVE AND 

CORNERSQUARE COMMUNITY CAPITAL236

“
ANNUAL REPORT: FISCAL YEAR 2022 | 73

For example, the accredited investor definition largely determines whether an 

individual is eligible to invest in many early-stage companies.240 However, African 

American/Black and Hispanic/Latino investors are excluded from the accredited 

investor definition at higher rates than White and Asian American/Pacific Islander 

investors due, in large part, to historic wealth inequality.241 

One area where data has shown progress has been Regulation Crowdfunding, where 

women and minority founders are finding more success raising capital than through 

other capital raising options.242

 

Related Developments

The Commission’s most recent rulemaking agenda indicates that it will consider 

amendments to Regulation D, including updates to the accredited investor definition 

and Form D.243 

Proposed Solution

Based on the feedback we have received, we recommend the following changes to the 

accredited investor definition and Regulation Crowdfunding. We also recommend 

proceeding with caution on any potential changes to Regulation D or Form D.

ACCREDITED INVESTOR DEFINITION:

The Commission should expand the definition to include additional 

qualitative professional criteria and offer more opportunities to 

demonstrate financial sophistication as an alternative to the income and 

net worth thresholds.

The Commission also should consider the impact any change to 

the income and net worth thresholds would have on minorities and 

populations located in rural areas. 

Rationale: 

• As reflected in the data244 on net worth and income inequality 

across demographic groups, raising the wealth thresholds 

would have a disparate impact on minorities, adding additional 

barriers to entry for minority entrepreneurs. 

• In addition, increased thresholds would have a disparate impact 

on geographic areas with a lower cost of living, including rural 

areas. These regions already have less capital raising activity 

than urban areas.245 
74 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

REGULATION CROWDFUNDING:

The Commission or Congress should amend Regulation 

Crowdfunding246 to increase the offering size threshold under which 

an issuer may meet its financial statement requirements by providing 

financial statements and income tax return information certified by the 

principal executive officer.

Rationale: 

• Crowdfunding offerings have been a successful source of 

funding for many women-founded, minority-founded, and 

geographically diverse companies.247 

• However, the requirement to have financial statements 

reviewed by an independent public accountant248 delays the 

ability to commence an offering and imposes an upfront cost 

without a guarantee that the offering will be successful. Under 

the Commission’s COVID-19 relief in effect from May 4, 

2020 through August 28, 2022, issuers offering $250,000 

or less in a 12-month period could meet the Regulation 

Crowdfunding financial statement requirements by providing 

financial statements of the issuer and certain information 

from the issuer’s Federal income tax returns, both certified by 

the principal executive officer.249 The relief was available to 

companies that had been operating for six months or more 

prior to the commencement of the offering. A permanent 

extension of this relief would benefit small businesses that 

may look to meet urgent funding needs through a Regulation 

Crowdfunding offering. 

Congress should amend Section 4A(f)(3) of the Securities Act to 

modify the provision that prohibits investment companies (or excluded 

companies under Section 3(b) or 3(c) of the Investment Company Act) 

from using the Regulation Crowdfunding exemption.250

Rationale:

• In 2020, in response to feedback, the Commission adopted 

Rule 3a-9 under the Investment Company Act to allow special 

purpose vehicles (SPVs) to conduct Regulation Crowdfunding 

offerings as co-issuers to a traditional issuer, provided that the 

SPV meets certain requirements.251 Entrepreneurs and other 

thought leaders report that this SPV model has not worked as 

intended due to the prescriptive requirements and the statutory 

prohibition on investment companies.
ANNUAL REPORT: FISCAL YEAR 2022 | 75

REGULATION D AND FORM D:

When considering changes to Regulation D, we urge the Commission 

not to make the Form D notice and associated requirements more 

burdensome, particularly for small businesses.

Rationale:

• The Rule 506(b) safe harbor to the statutory exemption 

provided by Section 4(a)(2) is the most commonly used pathway 

to raise capital.252Any changes that deter businesses from 

relying on this safe harbor are likely to have a chilling effect 

on access to capital. In addition, such changes would be most 

pronounced on small businesses and those owned by women 

and minorities that are already facing some of the greatest 

challenges accessing capital. 

On May 5, 2022, the Office joined National Diversity Council’s Asian Love Town Hall, which focused on empowering the 

Asian American/Pacific Islander community and the need to bridge network gaps.
76 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Background Context

Connecting with early-stage investors who bring relevant industry experience can 

have a significant and positive impact on a small business’s trajectory through 

mentorship, business connections, strategic guidance, and follow-on financial 

support. Yet not all entrepreneurs have personal connections to sophisticated, 

early-stage investors with deep pockets and the right risk tolerance.253 Registered 

broker-dealers tend to provide their matchmaking services for larger offerings,254 but 

a company’s need to connect with savvy investors applies regardless of the dollar-size 

of its offering. 

Since our first Annual Report in 2019, our Office has been advocating for regulatory 

clarity on the role of finders in facilitating introductions between founders and 

investors.255 This issue remains as timely today as ever.

Demographic Impacts

Women, minority, and rural founders often start with a smaller network of 

accredited, angel, and VC investors.256 The lack of access to networks of potential 

investors has an impact that extends well beyond capital raising and into company 

survival and growth prospects, diversity among board leadership, and the mentoring 

that often comes from savvy investors. These barriers to company success in turn 

may affect founders’ ability to build wealth and reinvest capital going forward.

Connecting founders with savvy investors is essential 

to capital raising.

Inclusive, collaborative entrepreneurial ecosystems can help bridge 

these long-standing gaps and dismantle... the barriers to access—

opportunity, funding, knowledge, and support.... [These barriers] get in 

the way of too many people starting businesses and spurring economic 

growth.”

PHILIP GASKIN, KAUFFMAN FOUNDATION257

“
ANNUAL REPORT: FISCAL YEAR 2022 | 77

On August 16, 2022, the Office joined a roundtable hosted by Engine where we heard about successes and challenges 

faced by entrepreneurs.

Related Developments

In October 2020, the Commission proposed an order258 that would permit natural 

persons to engage in certain limited “finders” activities involving accredited investors 

without registering with the Commission as brokers. The Commission has not taken 

further action on the proposal, and providing regulatory clarity for finders is not on 

the Commission’s current regulatory agenda.259

Proposed Solution

We hear frequently that the lack of regulatory clarity on the role of finders in 

facilitating introductions between investors and founders harms both investors and 

the companies those investors are seeking to support. The lack of a clear framework 

makes it easier for unscrupulous intermediaries to solicit investors without disclosing 

hidden conflicts of interest. Further, to the extent an intermediary engages in 

unregistered broker-dealer activity, it could expose the company to rescission 

rights, which would require the company to return to investors their investment 

plus interest.260 For decades, market participants have asked for clarity about the 

legal obligations of finders. We are supportive of those calls and recommend that 

Congress or the Commission provide additional regulatory clarity for finders. 
78 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Background Context

Businesses that seek funding beyond friends and family or their local angel network 

often turn to private funds of sophisticated pooled capital, such as VC funds. Larger 

funds tend to target larger investments so they can maintain a reasonably sized 

portfolio of companies that they can actively manage. As a result, earlier-stage, 

smaller deals may get pushed aside in favor of later-stage, more mature companies. 

Founders looking for seed and early-stage capital often struggle to raise financing 

for their smaller, earlier rounds. While micro-funds have strengthened seed activity, 

the percentage of total capital going to micro-funds and emerging fund managers 

remains just a sliver of the overall pie, with the percentage going to emerging fund 

managers declining to a new decade low.261 Founders seeking smaller amounts of 

capital—which are typically more regional rounds—are finding less funding before 

the large VC funds come to the table.262 For those businesses that do receive earlystage VC funding, that capital tends to be key to meeting developmental milestones, 

including rolling out operations, growth, and expansion.263

Emerging fund managers play a key role supporting startups across the country, 

particularly for those seeking smaller, early-stage financing. Their funds tend to be 

smaller and more likely to invest in a more diverse pool of entrepreneurs as well as 

businesses located in geographic areas not traditionally served by more established 

fund managers.264 However, emerging fund managers may be disproportionally 

affected by the recent slowdown in IPOs, as fewer IPOs mean fewer exits resulting 

in distributions to a fund’s LPs, which in turn may result in those LPs allocating the 

now smaller pool of available capital to established, larger fund managers.265

Demographic Impacts

Diversity among those who make investment decisions results in more capital 

flowing to more diverse founders.266

During outreach events, we repeatedly hear that support from an institutional LP 

can significantly enhance a new fund’s ability to attract other investors. While a 

number of LPs publicly pledged support for diverse fund managers following the 

2020 murder of George Floyd, we hear that the amount of capital earmarked for 

diverse fund managers is still a tiny fraction of the total amount that institutional LPs 

are allocating to VC investments.267

Emerging fund managers play a key role in 

small business capital formation and need support.
ANNUAL REPORT: FISCAL YEAR 2022 | 79

Related Developments

Last year, our Office recommended that Congress and the Commission explore 

regulatory solutions to support smaller, regional funds, including:

§	Amending the “venture capital fund” definition under Rule 203(l)-1 of the 

Investment Advisers Act of 1940 to permit VC funds to invest in other VC funds 

as a “qualifying investment.” 

§	Improving the utility of the “qualifying venture capital fund” exemption in 

Section 3(c)(1) of the Investment Company Act of 1940.

The Commission has the authority to amend the “venture capital fund” definition. 

Congress would need to act to improve the “qualifying venture capital fund” 

exemption. 

Proposed Solution

Given the role that emerging fund managers play in supporting startups, we reaffirm, 

and expand on, the recommendations in our 2021 Annual Report. Specifically, we 

recommend that: 

§	The Commission amend the “venture capital fund” definition under Rule 

203(l)-1 of the Investment Advisers Act of 1940 to treat VC funds’ investments 

in other VC funds to be “qualifying investments.” This would allow these 

investments to be excluded from the 20% non-qualifying basket. 

[W]e can’t believe that we’re all fighting gladiator style or Hunger 

Games style to get a small sliver of the pie... Just because [we are] 

historically overlooked fund managers doesn’t mean we should be 

looked at differently and given different opportunities for smaller slices 

of the pie than others.”

BRANDON BROOKS, OVERLOOKED VENTURES268

“
80 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Rationale: 

• This amendment would allow larger—and often more 

geographically concentrated—funds to invest in emerging 

fund managers who write smaller checks, increasing both the 

diversity of investment decision-makers and access to capital for 

founders seeking smaller VC funding rounds. As noted by the 

SEC’s Small Business Capital Formation Advisory Committee, 

“larger funds tend to invest larger amounts in a handful of 

later-stage companies, while smaller funds tend to invest smaller 

amounts in a proportionate handful of earlier-stage companies. 

A fund-of-funds model—where a larger fund invests in smaller, 

regional funds—could unlock capital otherwise competing for 

late-stage allocations and benefit smaller companies in emerging 

entrepreneurial ecosystems.”269

§	Congress increase the current 100 beneficial owners limit for funds that rely on 

the exemption in Section 3(c)(1) of the Investment Company Act of 1940.

Rationale: 

• Limiting a fund to 100 beneficial owners can make it more 

difficult to raise a sufficient amount of capital. Many managers 

tell us that this limitation is particularly challenging for new 

managers who may not have the networks, track record, or 

access to investors who can write large checks. 

§	Congress increase the limit on investors in, and expand the $10 million maximum 

size of, the “qualifying venture capital fund” exemption in Section 3(c)(1) of the 

Investment Company Act of 1940.

Rationale: 

• As noted in our 2021 Annual Report, assuming a “2 and 

20” fee structure by a fund, a $10 million (the maximum size 

under the definition) qualifying venture capital fund only has 

$200,000 per year to operate, inclusive of salaries, compliance, 

diligence, and portfolio management costs. Such a low amount 

sets these small funds up for failure. If Congress increases the 

$10 million cap, the current 250 investor limit may impede the 

ability of new managers to successfully raise a sufficient amount 

of capital, as we have seen in the case of traditional funds 

relying on the exemption in Section 3(c)(1) of the Investment 

Company Act of 1940. 
ANNUAL REPORT: FISCAL YEAR 2022 | 81

Background Context

“Banner year for IPOs” was the headline last year. Fast forward 12 months, 

and we are in a very different environment. A combination of factors, including 

macroeconomic conditions, notably tighter monetary policy and inflationary 

pressures, geopolitical challenges, disruptions to supply chains, a tight labor 

market, the reassessment of company valuations, and recent SEC rulemakings, have 

contributed to the significant decline in the number of IPOs.270

Simply put, the vibrancy of our public markets depends on two key factors: 

§	Are private companies going public?

§	Are public companies staying public?

Not only must we focus on ways to foster a robust IPO pipeline despite current 

macroeconomic headwinds, it is also critical that we address the challenges of 

staying public. 

Demographic Impacts

The demographic impacts we identify in the four recommendations above have 

ripple effects and are some of the leading indicators for the demographic challenges 

we see in the public markets. After all, a public company starts its journey as a 

private company and needs capital in order to mature to the point that it is ready 

to go public. If we are not able to address the challenges that impede women 

and minority founders from accessing capital to grow their startups into public 

companies, we are not going to see progress in the next generation of public 

companies led by women and/or minorities. If savvy women and minority investors 

do not have a role in making investment decisions, either because they do not 

qualify as accredited investors or because they are not able to launch or lead a fund, 

companies will lose out on the guidance and perspective those investors could have 

brought to the table. For some companies, that insight and experience could make 

the difference in whether they succeed in becoming and remaining a public company. 

Scaled disclosures for small public companies 

help them stay public.

[D]iversity is in the interest of businesses. A diverse board helps that 

business be more profitable. A diverse workforce helps that business be 

more profitable. The value proposition of diversity is there.”

PETER HOLT, THE JOINT CORPORATION271

“
82 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Related Developments

The vibrancy of our capital markets depends on having companies of varying sizes. 

Last year, we recommended tailoring the SEC’s disclosure and reporting framework 

to the complexity and size of operations of companies. In particular, we highlighted 

the need for scaling disclosure obligations or delaying compliance for small public 

companies.

Since then, the Commission has embarked on a number of initiatives that will affect 

the disclosures that public companies make. In some cases, the Commission has 

taken steps to scale obligations or delay compliance for small public companies,272

and in other cases, small public companies will be subject to the same requirements 

at the same time as much larger companies.273

Proposed Solution

Small public companies, compared to larger ones, receive less research coverage, 

attract lower levels of institutional investors, and are more sensitive to fixed 

compliance costs.274 It is imperative that we create an environment that nurtures and 

supports those small public companies staying public. Absent this, we will continue 

to see a declining number of small public companies,275 which translates into fewer 

investment choices for investors. 

On March 17, 2022, our Office met with women entrepreneurs in Phoenix, AZ where we heard about challenges they 

face raising capital.
ANNUAL REPORT: FISCAL YEAR 2022 | 83

With this in mind, we recommend that the Commission, when considering new 

disclosure obligations for public companies, scale those obligations and delay 

compliance for small public companies. Scaling disclosure obligations helps to better 

balance the costs and benefits of the rules, particularly because the proportional 

expense of costs that are not scalable is higher for small public companies. Delaying 

compliance for small public companies helps to promote better initial disclosure for 

those companies, as they will benefit from seeing the disclosure that large public 

companies prepare in response to similar new requirements. 

[R]ules and exceptions out there for small reporting companies and 

emerging growth companies—that is really pivotal to what allowed 

SkyWater to become a public company when we did. Without that, we 

very likely would not have been able to capitalize on the opportunity to 

go to market and become a public company in 2021.”

STEVE MANKO, SKYWATER TECHNOLOGY, INC.

276

“
84 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION
ANNUAL REPORT: FISCAL YEAR 2022 | 85

Small Business Capital 

Formation Advisory 

Committee FY2022 Summary

T

he Small Business Advocate Act also established the SEC’s Small Business Capital Formation 

Advisory Committee. The Committee is designed to provide a formal mechanism for the 

Commission to receive advice and recommendations on Commission rules, regulations, and 

policy matters affecting: small businesses, from emerging, privately-held companies to publiclytraded companies with less than $250 million in public market capitalization; trading in securities 

of such companies; and public reporting and corporate governance of such companies. The Office 

provides administrative support for the Committee, which otherwise functions independently.

The Committee’s membership includes company and investor representatives, and other thought 

leaders from across a diverse set of experiences, industries, geographies, and company life cycle 

stages. The Commission is grateful for their service and commitment to small businesses and their 

investors. 

The members of the Committee as of the end of fiscal year 2022 were as follows:

CARLA GARRETT, Chair

Corporate Partner,

Potomac Law Group PLLC 

Washington, DC

JEFFREY M.SOLOMON, 

Vice Chair

Chief Executive Officer, 

Cowen, Inc.

New York, NY

GREGORY YADLEY, Secretary

Partner, Shumaker, 

Loop & Kendrick, LLP

Tampa, FL

YOUNGRO LEE, 

Assistant Secretary

CEO and Co-Founder, 

NextSeed

Houston, TX

DONNEL BAIRD

Founder and CEO, 

BlocPower LLC

Brooklyn, NY

WILLIAM M. BEATTY*

Securities Administrator of the 

Washington State Securities 

Division

Olympia, WA
86 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

KESHA CASH

Founder and General Partner, 

Impact America Fund

Oakland, CA

GREG DEAN*

Senior Vice President of the Office 

of Government Affairs, FINRA

Washington, DC

BAILEY DEVRIES*

Associate Administrator for the 

Office of Investment & Innovation, 

U.S Small Business Administration

Washington, DC

ROBERT FOX

National Managing Partner, 

Professional Standards Group, 

Grant Thornton LLP

Chicago, IL

STEPHEN GRAHAM

Co-Chair, Fenwick & West LLP’s 

Life Sciences Practice

Seattle, WA

SARA HANKS

CEO and Co-Founder, 

CrowdCheck, Inc.

Alexandria, VA

BRIAN LEVEY

Chief Business Affairs and Legal 

Officer, Upwork Inc.

San Francisco, CA

SAPNA MEHTA

General Counsel & Chief 

Compliance Officer, Rise of 

the Rest Seed Fund; Associate 

General Counsel, Revolution

Washington, DC

CATHERINE MOTT

Founder and CEO of 

BlueTreeCapital Group, 

BlueTree Allied Angels, and

BlueTree Venture Fund

Pittsburgh, PA

JASON SEATS

Chief Investment Officer, 

Techstars

Austin, TX

MARC OORLOFF SHARMA*

Chief Counsel of the Office of the 

Investor Advocate, U.S. Securities 

& Exchange Commission

Washington, DC

HANK TORBERT

President, AltaMax, LLC

New Orleans, LA

SUE WASHER

President and CEO, Applied 

Genetic Technologies Corporation

Gainesville, FL 

* Committee members include the SEC’s Advocate for Small Business Capital Formation (vacant at 

the end of fiscal year 2022) and three non-voting members appointed by each of the SEC’s Investor 

Advocate, the North American Securities Administrators Association (NASAA), and the Small Business 

Administration, as well as an observer appointed by the Financial Industry Regulatory Authority 

(FINRA).
ANNUAL REPORT: FISCAL YEAR 2022 | 87

Summary of Activities

The Committee met virtually four times during FY2022. Materials from the meetings, including 

agendas, transcripts, webcasts, and presentations, are available on the Committee’s webpage.

Meeting Date Agenda Topics

November 16, 2021

Rural Entrepreneurship and the Challenges Accessing Financial 

Capital and the U.S. Department of Treasury’s State Small 

Business Credit Initiative

February 10, 2022 Accredited Investor Definition

May 6, 2022 Proposed Rules on Climate-Related Disclosures and SPACs, 

Shell Companies, and Projections

August 2, 2022

Secondary Market Liquidity for Investors in Regulation A and 

Regulation Crowdfunding Companies and Smaller Public 

Companies
88 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

Committee Recommendations

During fiscal year 2022, the Committee put forward the following four recommendations to the 

Commission: 

Accredited Investor Definition

February 10, 2022

According to the Commission’s rulemaking agenda, the Division of Corporation Finance 

is considering recommending that the Commission seek public comment on updates to the 

financial thresholds in the definition of “accredited investor” as set forth in Securities Act 

Rule 501(a) of Regulation D. The definition was most recently amended in 2020, and in 

connection with that rulemaking, the Committee made several recommendations in 2019.

The Committee recognizes the complexity of crafting a workable definition of accredited 

investor that balances protecting investors with facilitating capital formation and 

investment opportunities. As the Commission considers updating the definition’s financial 

thresholds for individual investors’ net worth and annual income, the Committee urges the 

Commission to avoid unintended consequences. It is also important for the Commission 

to recognize that a business’s failure to succeed is not the same thing as fraud. And further, 

fraud occurs at the hands of bad actors regardless of regulatory thresholds. The Committee 

believes that the SEC should continue its robust enforcement program to root out fraud 

across markets of all sizes, while supporting investor education on the importance of 

portfolio diversification to mitigate risk of one investment’s failure. 

Accredited investors are a critical source of early-stage capital for small businesses in 

communities across the country, and changes that would shrink the pool of currently 

accredited investors would have a detrimental effect on small business capital formation. 

The ripple effects of limiting access to early-stage capital would negatively impact access to 

future rounds of financing from funds and other later-stage investors, rippling further into 

the companies that will one day go public. 

The Committee is also concerned that raising the thresholds could have disproportionate 

impacts on various demographic groups, making the definition less inclusive and widening 

the nation’s already wide racial wealth gap. The Committee discussed the wealth gap 

among different racial and ethnic groups, as well across different geographic communities. 

The Commission should be mindful of the disparate impacts that increases to the financial 

thresholds could have on the pool of accredited investors. A more homogeneous pool 

of accredited investors would negatively impact the diversity of entrepreneurs who raise 

capital, decreasing inclusion in capital formation. 
ANNUAL REPORT: FISCAL YEAR 2022 | 89

Further, the Committee discussed the additional ripple effects that raised financial 

thresholds would have on companies whose shareholders may no longer qualify as 

accredited investors, inadvertently triggering the registration thresholds of Section 12(g).

In light of the foregoing and consistent with the Committee’s 2019 recommendations, 

the Committee presents the following new recommendations to the Commission for 

consideration in connection with potential future rulemaking on the definition of accredited 

investor: 

1. Do not increase the current financial thresholds for individual investors to qualify as 

accredited. 

2. Going forward, consider indexing the financial thresholds for inflation on a periodic 

basis. 

3. Given the imperfect proxy that financial thresholds provide for measuring investor 

sophistication, provide alternative methods for investors to qualify as sophisticated, 

which could include investment experience, knowledge gained through work experience 

or membership in associations, education credentials, additional professional 

certifications, or tests to demonstrate sophistication. 

Lastly, given the impact of early-stage investors who tend to invest within their local 

communities, as well as regional differences in income and wealth, the Committee 

recommends that the Commission consider creating a new exemption for local and/or 

micro-investments that would not be limited to accredited investors.

Climate-Related Disclosures Proposal

May 6, 2022

On March 21, 2022, the Commission proposed rules on the Enhancement and 

Standardization of Climate-Related Disclosures for Investors (Release No. 33-11042). 

As the Commission works toward finalizing the proposed rules, while the Committee 

recognizes that climate is an important topic, the Committee urges the Commission to 

consider:

§	Providing a more detailed cost-benefit analysis, including the impact that the proposed 

rules would have on smaller public and private companies; 
90 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

§	Scaling and delaying the compliance requirement for emerging growth companies, along 

with smaller reporting companies; 

§	Expanding the safe harbor for liability for Scope 3 emissions disclosures to include all 

climate-related disclosures; 

§	Eliminating the attestation requirement, as it would be costly and burdensome, and it 

will delay reporting; 

§	Requiring the information to be furnished, rather than filed; 

§	Tailoring the requirements for certain industries; 

§	Re-evaluating the timing for filing climate-related disclosures since the information may 

not be available in time for a company’s annual report on Form 10-K; and 

§	Providing a longer implementation timeframe for the new rules, so that smaller 

companies would have more time to transition, work through implementation, and 

comply with the new requirements.

In addition, the Committee has the following observations and suggestions:

1. The Committee asks that the Commission consider incentives, rather than penalties, for 

companies that are providing climate-related disclosures. Companies that are moving in 

the direction of doing things that are more climate-friendly may, for instance, be deterred 

from putting together an analysis due to concerns of having to disclose it before it is 

finalized or concerns of being required to provide additional disclosures that could be 

financially costly and time-consuming.

2. The Committee urges the Commission consider how the climate-related disclosure 

requirements may deter private companies from going public. There should be a pathway 

for very small companies to become public reporting companies without hiring expensive 

climate-related consultants.

3. The Commission should consider the rule’s impact on small companies that are suppliers 

or vendors for public companies. To the extent public companies are required to track 

and provide downstream greenhouse gas emissions, smaller suppliers and vendors that 

are unable or delayed in providing their greenhouse gas emissions may lose business to 

larger companies that can provide such metrics. Due to disadvantages arising from lack 

of resources and smaller operations scale, both small public and private companies may 

face greater challenges in accessing capital and generating revenue they need to sustain 

their businesses. 
ANNUAL REPORT: FISCAL YEAR 2022 | 91

SPACs Proposal

May 6, 2022

On March 30, 2022, the Commission proposed rules on Special Purpose Acquisition 

Companies (SPACs), Shell Companies and Projections (Release No. 33-11048). The 

Committee’s recommendations related to this proposal are as follows:

1. The Committee would like for SPACs to remain a viable path for companies to pursue as 

a means of getting access to public market capital. The Committee is concerned that the 

proposed rules, as written, might render SPACs unusable as an alternative to IPOs. 

2. The Committee is generally supportive of improving disclosures for SPACs, particularly in 

the period of time between the announcement of the merger and the closing of the de-SPAC 

transaction. 

3. The Committee encourages the Commission to clearly identify which participants would 

have underwriter liability. Participants should be held accountable to the same extent they 

would be in traditional IPOs. 

4. Management projections are an important part of the rationale for companies in 

determining whether to engage in a merger with a SPAC, and they are necessary when 

financial intermediaries provide fairness opinions related to de-SPAC transactions. As a 

result, the Committee recommends that the projections in de-SPAC transactions be covered 

by the liability safe harbor provisions of the Private Securities Litigation Reform Act when 

disclosed in the de-SPAC transaction. 

5. The Committee recommends that the Commission expand or eliminate the 18 month and 

24 month timelines provided in the Investment Company Act safe harbor for SPACs. The 

requirement to engage in a de-SPAC transaction within 18 months after its IPO and complete 

its de-SPAC transaction within 24 months could incentivize SPAC sponsors to engage in 

riskier acquisitions to complete the merger process within the artificially short periods.

Regulation A Secondary Market Liquidity

August 2, 2022

The Committee discussed secondary market liquidity issues. Provided that statutory authority 

can be established, the Committee recommends that the Commission, on a pilot basis, provide 

federal preemption from state regulation for secondary sales by investors of securities initially 

sold pursuant to Tier 2 of Regulation A. This recommendation is limited to issuers current in 

their ongoing reports and whose primary offering was subject to Staff review.
92 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION
ANNUAL REPORT: FISCAL YEAR 2022 | 93

Endnotes

1 The SEC conducts the Forum annually and

prepares a 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 See https://www.sec.gov/education/capitalraising

3 This graphic is based on DERA data. This

graphic depicts amounts reported or estimated 

as raised from July 1, 2021 through June 30, 

2022. Data on offerings under Regulations D 

and Crowdfunding is based on information 

reported by companies and was collected from 

EDGAR filings (new filings and amendments) 

on Forms D and C, respectively. Data on 

registered offerings was collected from Thomson 

Financial’s SDC Platinum database. For offerings 

under Regulation Crowdfunding, except where 

specified otherwise, estimates of the number 

of offerings are based on offerings completed 

during this period as shown on progress updates 

on Form C-U; estimates of amounts raised are 

based on proceeds reported in progress updates 

filed on Form C-U during the report period. 

For offerings under Regulation A, except where 

specified otherwise, estimates of the number 

of offerings are based on offerings qualified 

during this period, excluding post-qualification 

amendments; estimates of amounts raised are 

based on proceeds reported in filings made 

during the report period. Capital raised is 

based on information reported by companies 

in Forms 1-Z, 1-K, 1-SA, 1-U, and offering 

circular supplements pertaining to completed 

and ongoing Regulation A offerings and postqualification amendments, and for companies 

whose shares have become exchange-listed, 

information from other public sources. Estimates 

represent a lower bound on the amounts raised 

given the timeframes for reporting proceeds 

following completed or terminated offerings and 

that offerings qualified during the report period 

may be ongoing. For the offerings that permit 

pooled investment funds, such as Rule 506(b) 

and (c) of Regulation D and registered offerings, 

the data includes offerings conducted by pooled 

investment funds.

4 “Other exempt offerings” includes estimated

amounts raised under Regulation S, and Rule 

144A for calendar year 2021. The data used 

to estimate the amounts raised in 2021 for 

other exempt offerings includes: (1) offerings 

under Regulation S that were collected from 

Thomson Financial’s SDC Platinum service; 

and (2) resale offerings under Rule 144A that 

were collected from Thomson Financial’s SDC 

New Issues database, the Mergent database, 

and the Asset-Backed Alert and Commercial 

Mortgage Alert publications, to further estimate 

the exempt offerings under Regulation S. We 

include amounts sold in Rule 144A resale 

offerings because those securities are typically 

issued initially in a transaction under Section 

4(a)(2) or Regulation S but generally are not 

included in the Regulation S data identified 

above. These numbers are accurate only to the 

extent that these databases are able to collect 

such information and may understate the actual 

amount of capital raised under these offerings 

if issuers and underwriters do not make this 

data available. The data on Rule 144A debt 

offerings from Mergent is available only through 

September 30, 2021. We have extrapolated the 

data to obtain a full calendar year. We do not yet 

have data to provide an estimated amount raised 

under Regulation S and Rule 144A for the 12 

month period ended June 30, 2022.

5 17 C.F.R. § 230.506(b); see https://www.sec.gov/

smallbusiness/exemptofferings/rule506b.

6 17 C.F.R. § 230.506(c); see https://www.sec.gov/

smallbusiness/exemptofferings/rule506c.

7 17 C.F.R. § 230.504; see https://www.sec.gov/

smallbusiness/exemptofferings/rule504.

8 17 C.F.R. § 227.100 et seq.; see https://

www.sec.gov/smallbusiness/exemptofferings/

regcrowdfunding.

9 Securities Act of 1933 § 3(a)(11), 17 C.F.R. § 

230.147, and 17 C.F.R. § 230.147A; see https://

www.sec.gov/smallbusiness/exemptofferings/

intrastateofferings.

10 17 C.F.R. § 230.251 et seq.; see https://www.sec.

gov/smallbusiness/exemptofferings/rega.

11 See https://www.sec.gov/investor/alerts/ipoinvestorbulletin.pdf for more information.

12 15 U.S.C. § 77a, et seq.; see https://www.sec.gov/

smallbusiness/goingpublic.
94 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

13 This graphic presents capital raised in registered,

Regulation D and Regulation A offerings across 

the top industries from July 1, 2021 through 

June 30, 2022. Offerings by non-pooled 

investment funds in other industries accounted 

for approximately $25 billion, $79 billion and 

$96 million in registered, Regulation D and 

Regulation A offerings, respectively. Regulation 

A and registered offerings were classified into 

industry groups based on the primary SIC code 

reported by the company. Industry groups 

were self-reported by companies on Form D. 

Differences in data sources and definitions 

may limit the comparability of industry data. 

Offerings by pooled investment funds, which 

accounted for approximately $63 billion 

and $2.1 trillion in registered offerings and 

Regulation D, respectively, are excluded from 

this graphic. See supra note 3 for a description of 

how these amounts were reported or estimated.

14 The maps included in this section depict the

amounts reported or estimated as raised by 

issuers, including pooled investment funds that 

report a primary location in the U.S., including 

U.S. territories, from July 1, 2021 through June 

30, 2022. See supra note 3 for a description of 

how these amounts were reported or estimated.

15 See Crowdfund Capital Advisors, “Investment 

Crowdfunding. Democratizing Access to 

Capital. 2021 Annual Report, “Feb. 2022” at 

9, 12-13, 31-32 and 49, available at https://

crowdfundcapitaladvisors.com/2021-investmentcrowdfunding-year-in-review-report-released/.

16 Because of lags in offering qualifications,

withdrawals, and abandonments, for greater 

comparability, this analysis considers all initiated 

Regulation Crowdfunding offerings and does 

not exclude offerings that are subsequently 

withdrawn or abandoned. See supra note 3 for a 

description of how these amounts were reported 

or estimated.

17 Because of lags in offering qualifications,

withdrawals, and abandonments, for greater 

comparability, this analysis considers all initiated 

Regulation Crowdfunding offerings and does 

not exclude offerings that are subsequently 

withdrawn or abandoned. See supra note 3 

for a description of the methodology used to 

calculate this data. Effective March 15, 2021, 

the maximum aggregate amount that an 

issuer is permitted to raise under Regulation 

Crowdfunding in a 12-month period was 

raised to $5 million (from $1.07 million). See

“Facilitating Capital Formation and Expanding 

Investment Opportunities by Improving Access 

to Capital in Private Markets,” (Mar. 10, 

2021) available at https://www.sec.gov/corpfin/

facilitating-capital-formation-secg.

18 See supra note 3 for a description of the 

methodology used to calculate this data. Effective 

March 15, 2021, the maximum aggregate 

amount that an issuer is permitted to raise under 

Rule 504 of Regulation D in a 12-month period 

was raised to $10 million (from $5 million). See

Facilitating Capital Formation and Expanding 

Investment Opportunities by Improving Access 

to Capital in Private Markets, supra note 17. 

Offerings under Rule 504 accounted for 0.9% of 

all new Regulation D offerings and 0.03% of the 

aggregate amounts raised under Regulation D. 

From March 15, 2021 through June 30, 2022, 

there were 12 offerings that raised between $5 

and $10 million under Rule 504 for an aggregate 

of $77.6 million.

19 This graphic includes the top industries based on

the reported amounts raised by non-pooled fund 

issuers during the respective periods. Offerings 

by non-pooled fund issuers in other industries 

accounted for approximately $62 billion and $86 

billion in the twelve months ended June 30, 2021 

and 2022, respectively. See supra note 3 for a 

description of the methodology used to calculate 

this data.
ANNUAL REPORT: FISCAL YEAR 2022 | 95

20 Because of lags in offering qualifications,

withdrawals, and abandonments, for greater 

comparability, this analysis considers all initiated 

Regulation A offerings (whether qualified or 

not) and does not exclude offerings that are 

subsequently withdrawn or abandoned. Due 

to lags and bunching in proceeds data and 

temporary relief provided to Regulation A 

in March 2020, the dollar amounts in this 

graphic are based on the amounts sought (in 

$ million) in qualified Regulation A offerings 

and not on reported proceeds. See supra note 

3 for a description of the methodology used 

to calculate this data. Effective March 15, 

2021, the maximum aggregate amount that an 

issuer was permitted to raise under Tier 2 of 

Regulation A in a 12-month period was raised to 

$75 million (from $50 million). See Facilitating 

Capital Formation and Expanding Investment 

Opportunities by Improving Access to Capital in 

Private Markets, supra note 17.

21 This graphic includes the top industries by

aggregate amounts sought in qualified Regulation 

A offerings during the respective periods. 

Additional offerings accounted for approximately 

$81 million and $162 million in the twelve 

months ended June 30, 2021 and 2022, 

respectively. See supra note 3 for a description of 

the methodology used to calculate this data.

22 This graphic includes pooled funds. See supra

note 3 for a description of the methodology used 

to calculate this data.

23 This graphic includes the top industries by IPO

proceeds. Additional IPOs by non-pooled fund 

issuers accounted for approximately $9.6 billion 

and $7.6 billion in the twelve months ended 

June 30, 2021 and 2022, respectively. Pooled 

investment funds, including SPACs, accounted 

for approximately $179 billion and $60 billion 

in the twelve months ended June 30, 2021 

and 2022, respectively. See supra note 3 for a 

description of the methodology used to calculate 

this data.

24 See NVCA, “2022 Yearbook,” (Mar. 2022) at 

10 (noting that VCs typically invest in young, 

high-growth companies in need of capital to 

grow) available at https://nvca.org/wp-content/

uploads/2022/03/NVCA-2022-Yearbook-Final.

pdf. See also Thomas Huckabee, “Not All 

Startups Are a Fit for the VC Funding Model: 

Why They Need Projected Revenues of over 

$25 Million,” Thomas Huckabee, Inc., (June 

11, 2021) available at https://tehcpa.net/

uncategorized/not-all-startups-are-a-fit-for-thevc-funding-model-why-they-need-projectedrevenues-of-over-25-million/.

25 See Daniel Wilmoth, Ph.D, “Small Business 

Facts. Small Business Job Creation,” U.S. Small 

Business Administration Office of Advocacy, 

(Apr. 2022) available at https://cdn.advocacy.

sba.gov/wp-content/uploads/2022/04/22141927/

Small-Business-Job-Creation-Fact-SheetApr2022.pdf.

26 See U.S. Small Business Administration Office of 

Advocacy, “2022 Small Business Profile,” (2022) 

at 1, available at https://cdn.advocacy.sba.gov/

wp-content/uploads/2022/08/30121338/SmallBusiness-Economic-Profile-US.pdf. 

27 See Jeffrey M. Jones, “Confidence in U.S. 

Institutions Down; Average at New Low,” (July 

5, 2022) available at https://news.gallup.com/

poll/394283/confidence-institutions-downaverage-new-low.aspx (noting that 68% of 

Americans have confidence in small businesses). 

Major US Institutions included in survey: Small 

business, military, police, medical system, church 

or organized religion, public schools, organized 

labor, banks, large technology companies, 

U.S. Supreme Court, presidency, newspapers, 

criminal justice system, Big business, Television 

news, and Congress. See Gallup, “Confidence in 

Institutions,” (2022) available at https://news.

gallup.com/poll/1597/confidence-institutions.

aspx.

28 See Ewing Marion Kauffman Foundation, 

“America’s New Business Plan,” (2022) at 12, 

available at https://www.startusupnow.org/wpcontent/uploads/sites/12/2022/05/ANBP-RefreshFinal_v3.pdf#page=12&zoom=100,0,0.

29 See Nasdaq Entrepreneurial Center, “Pay 

Ownership Valuation (POV) Research Findings,” 

(2022) at 7, available at https://evidence2impact.

psu.edu/wp-content/uploads/2022/07/POVFinal_Research.pdf.
96 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

30 See Small Business Majority, “Survey: Small 

Businesses Optimistic About the Future, Despite 

Concerns about Inflation and Barriers to 

Capital, (Oct. 13, 2022) at 2, available at https://

smallbusinessmajority.org/sites/default/files/

research-reports/2022-SSTB-SBM-Network-PollReport.pdf. 

31 See Hello Alice, “Capital Access Temp Check,” 

(Apr. 2022) at 1, available at https://helloalice.

com/wp-content/uploads/2022/05/APRILCapital-Access-Temp-Check-.pdf.

32 Id.

33 Id. at 3.

34 See January Ventures, “2021 Early Stage 

Founder Sentiment Report,” (2021) at 9, 

available at https://34a0404e-3457-4b9f8fcc-19732fc72efe.filesusr.com/ugd/8d7061_

f955edaf79ba40bba50fcca2a2ebbd53.pdf.

35 See Ewing Marion Kauffman Foundation, supra

note 28, at 20.

36 Id.

37 See The White House, “The Small Business 

Boom Under the Biden-Harris Administration,” 

(Apr. 2022) at 1, available at https://www.cdfa.

net/r/WhiteHouse_04-2022_Business-BoomUnder-Biden-Harris-Administration.html.

38 See Economic Innovation Group, “More 

Physical Places of Businesses Open Now than 

Pre-Pandemic, Led by Sun Belt Metros,” (Apr. 5, 

2022) available at https://indicators.kauffman.

org/wp-content/uploads/sites/2/2022/03/2021-

Early-State-Entrepreneurship-National-Report.

pdf. By contrast, only 44 percent of counties had 

reached a similar milestone five full years after 

the onset of the Great Recession.

39 See Robert Fairlie, “National Report on 

Early-Stage Entrepreneurship in the United 

States: 2021,” (Mar. 2022) at 19, available at

https://indicators.kauffman.org/wp-content/

uploads/sites/2/2022/03/2021-Early-StateEntrepreneurship-National-Report.pdf.

40 See Federal Reserve Banks, “Small Business 

Credit Survey. 2022 Report on Employer Firms,” 

(Feb. 22, 2022) at 7, available at https://www.

fedsmallbusiness.org/survey/2022/report-onemployer-firms. 

41 Id. at i.

42 Id. at 7. In addition, 45% cut staff hours 

or downsized operations, 28% altered their 

payments or did not make a payment, and 2% 

reported no action in response to the challenges.

43 Id. at 19. Percentages add to more than 100 

because respondents could select multiple 

options. Unlike prior years, the Federal Reserve’s 

Small Business Credit survey did not include data 

about the use of retained earnings for ongoing 

business operations.

44 Id. at ii, 14-17. In 2021, 42% of businesses made 

their need met, a decline from 47% of businesses 

in 2020. 

45 Id. at ii, 16-17.

46 See Jeffrey Sohl, “The Angel Market in 2021: 

Metrics Indicate Strong Market,” Center for 

Venture Research, (May 20, 2022) at 1, available 

at https://paulcollege.unh.edu/sites/default/files/

resource/files/fy_2021_analysis_report_final.pdf.

47 Id. at 1.

48 Id.

49 Id. at 2.

50 See Angel Capital Association, “Angel Funders 

Report 2022,” (Nov. 2022) at 10, available at

https://www.angelcapitalassociation.org/angelfunders-report-2022/.

51 Id. at 14.

52 See Jeffrey Sohl, supra note 46, at 1.

53 Id. at 2.

54 See Angel Capital Association, supra note 50, at 

36.

55 Id. at 12.

56 See “Seed Round” available at https://www.sec.

gov/jargon-z#S.

57 See PitchBook-NVCA, “Venture Monitor Q2 

2022,” (July 13, 2022) at 8, available at https://

pitchbook.com/news/reports/q2-2022-pitchbooknvca-venture-monitor.

58 See Samir Kaji, “Why Emerging Managers have 

Become a Staple of LP Portfolios,” Venture 

Unlocked (Aug. 11, 2022) available at https://

ventureunlocked.substack.com/p/why-emergingmanagers-are-a-critical; see also Gené Teare, 

“How Seed Funding Has Exploded in the Past 10 

Years,” (Oct. 28, 2021) available at https://news.

crunchbase.com/venture/seed-funding-startupstop-vc-firms-a16z-nea-khosla/. 

59 See Samir Kaji, supra note 58 (providing 2022 

estimate); see CBInsights, “The 106 Most 

Active Seed Venture Capital Firms,” (Jan. 10, 

2015) available at https://www.cbinsights.com/

research/active-seed-venture-capital-firms-2014/ 

(providing number of active U.S. seed VC 

investors as of 2010-2014).

60 See PitchBook-NVCA, supra note 57, at 8. Excel 

“Angel & Seed Activity” tab.
ANNUAL REPORT: FISCAL YEAR 2022 | 97

61 See Dropbox DocuSend, “The Pre-Seed Round 

in 2021-22. Adapting the Pitch Deck for a New 

Market,” (Aug. 17, 2022) at 10, available at

https://try.docsend.com/fundraising-report; see

Dropbox DocuSend, The Seed Round in 2021-

22. Proving Market Fit and Monetization Amid 

Uncertainty,” (Nov. 2022) at 11, available at

https://try.docsend.com/seed-fundraising-report. 

62 See Dropbox DocuSend, “The Pre-Seed Round 

in 2021-22. Adapting the Pitch Deck for a New 

Market,” supra note 61, at 10.

63 See Dropbox DocuSend, “The Pre-Seed Round 

in 2021-22. Adapting the Pitch Deck for a New 

Market,” supra note 61, at 21; see Dropbox 

DocuSend, “The Seed Round in 2021-22. 

Proving Market Fit and Monetization Amid 

Uncertainty,” supra note 61, at 22. 

64 See Dropbox DocuSend, “The Pre-Seed Round 

in 2021-22. Adapting the Pitch Deck for a New 

Market,” supra note 61, at 18.

65 Id. at 3-4.

66 See Dropbox DocuSend, “The Seed Round 

in 2020-21. Make or Break Moment for 

Founders,” (2021) at 19, available at https://try.

docsend.com/seed-fundraising-report.

67 See Jeffrey Sohl, supra note 46, at 2.

68 See PitchBook-NVCA, supra note 57. Excel 

“Angel & Seed Activity” tab. This graph depicts 

the combined the Angel and Seed market. 

However, the angel market constitutes a small 

part of the combined market values. From 2018 

to Jun. 30, 2022, the angel activity was between 

13% and 5% of the combined angel and seed 

market value reflected in the graph.

69 Id at 8.

70 Id.

71 See PitchBook-NVCA, “Venture Monitor Q1 

2022 (Apr. 13, 2022) at 9, available at https://

pitchbook.com/news/reports/q1-2022-pitchbooknvca-venture-monitor. Excel “Fundraising 

Activity” tab; see Kyle Stanford, “Micro-Funding 

Opportunity. Micro-Funds Proliferate in a 

Market Where Everything is Getting Larger,” 

PitchBook (Apr. 5, 2022) at 2-3, available at

https://files.pitchbook.com/website/files/pdf/

Q2_2022_PitchBook_Analyst_Note_MicroFunding_Opportunity.pdf. 

72 See Kyle Stanford, supra note 71, at 8.

73 Id. at 6.

74 See Angel Resource Institute, “HALO Report. 

Annual Report on Angel Investments (2021) at 

4, available at https://angelresourceinstitute.org/

reports/HALO2021.pdf; see Kyle Stanford, supra

note 71, at 5.

75 Regions that do not have data available are

shown in white with an outline. See Angel 

Resource Institute, supra note 74, at 7. The 

overall percent of in-region investments was 75% 

in 2020 and 60% in 2019. See Angel Resource 

Institute, “HALO Report. Annual Report on 

Angel Investments,” (2020) at 6, available 

at https://angelresourceinstitute.org/reports/

HALO2020.pdf.

76 See Kyle Stanford, supra note 71, at 5.

77 Id.

78 See Kenan Institute of Private Enterprise, 

“Capital Ecosystems: Seeding Small and Regional 

Funds to Increase Opportunity,” (June 1, 2022) 

available at https://kenaninstitute.unc.edu/kenaninsight/capital-ecosystems-seeding-smaller-andregional-funds-to-increase-opportunity/.

79 See PitchBook-NVCA, supra note 57. Excel 

“Deals x State” tab.

80 Id. The top three states for VC funding are 

California, New York, and Massachusetts.

81 See Venture Forward, “Employment Dynamics 

at VC-Backed Companies in the United States: 

1990 to 2020,” (Feb. 15, 2022) available 

at https://ventureforward.org/resources/

employment-dynamics/.

82 See NVCA, supra note 24, at 10; see also 

Venture Forward, “Venture 101,” (2022) 

available at https://ventureforward.org/

education/venture-101/.

83 See NVCA, supra note 24, at 10.

84 Id.

85 See Natee Amornsiripanitch et al., “More than 

Money: Venture Capitalists on Boards,” The 

Journal of Law, Economics, and Organization

(Apr. 11, 2019) at 5, available at https://papers.

ssrn.com/sol3/papers.cfm?abstract_id=2586592. 

86 See Jeremy Greenwood et al., “Venture Capital: 

A Catalyst for Innovation and Growth,” (Apr. 

21, 2022) at 3, available at https://files.stlouisfed.

org/files/htdocs/publications/review/2022/04/06/

venture-capital-a-catalyst-for-innovation-andgrowth.pdf. 

87 See PitchBook-NVCA, supra note 57, at 31.

88 See Marina Tempkin, “VCs Hit with 

'Fundraising Pain' as LPs Deal with Venture 

Overexposure,” PitchBook (May 5, 2022) 

available at https://pitchbook.com/news/articles/

vc-fundraising-venture-capital-asset-allocationsLP-GP-diligence. 
98 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

89 See Will Gornall and Ilya A. Strebulae, “The 

Economic Impact of Venture Capital: Evidence 

from Public Companies,” (June 2021) at 7, 

available at https://papers.ssrn.com/sol3/papers.

cfm?abstract_id=2681841 (noting that census 

data show 4.3 million business formations in 

2020 (31 million over the past decade), while 

PitchBook data show 3,842 companies received 

their first VC financing in 2020 (35 thousand 

over the past decade)).

90 See NVCA, supra note 24, at 8. Data from 

PitchBook-NVCA, supra note 57. Excel “Median 

Deal Size” tab. Average exit value is calculated 

from the exit value and exit count. See Venture 

Forward, supra note 81.

91 See PitchBook-NVCA, supra note 57, at 3.

92 Id. Excel “Deal Activity” tab.

93 Id. Excel “Angel and Seed Activity”, “Early 

Stage Activity” and “Late Stage Activity” tabs. 

94 Id. at 14. Excel “Median Deal Size” tab; see 

also Lian Chang, “State of Private Markets,” 

Carta (Aug. 19, 2022) available at https://carta.

com/blog/state-of-private-markets-q2-2022/ 

(regarding the relative stagnation of post-money 

valuations at Series C, D and E+ levels).

95 See Lian Chang, supra note 94.

96 See PitchBook-NVCA, supra note 57. Excel 

“Fundraising x Size tab; see Priyamvada Mathur, 

“US Venture Capital Trends in Five Charts,” 

PitchBook, (July 15, 2022) available at https://

pitchbook.com/news/articles/venture-monitor-vctrends-charts. 

97 See PitchBook-NVCA, “Q1 2022 PitchBook 

NVCA Venture Monitor First Look. VC Industry 

Facing Market Full of Headwinds,“ (Apr. 5, 

2022) at 2, available at https://files.pitchbook.

com/website/files/pdf/Q1_2022_PitchBook_

NVCA_Venture_Monitor_First_Look.pdf.

98 See PitchBook-NVCA, supra note 57, at 35. 

Excel “Emerging vs. Experienced Funds” tab. 

Emerging is defined as firms that have launched 

fewer than four funds and Experienced firms are 

defined as firms that have opened four or more 

funds.

99 Id.

100 See Silicon Valley Bank, “Global Fund 

Banking Outlook Report,” (Q3 2022) at 12, 

available at https://www.svb.com/globalassets/

trendsandinsights/reports/global-fund-bankingoutlook/q3-2022/gfb-report-q3-2022-9722.pdf.

101 Id. Respondents to the survey can choose up to 

three options. 

102 Id.

103 Id. Respondents to the survey can choose up to 

three options. 

104 Id.

105 Id. See also Michael Maziar, “Rising Tech 

Hubs Mean New Opportunities for Emerging 

Managers,” Silicon Valley Bank (Oct. 4, 2022) 

available at https://www.svb.com/emergingmanager-insights/scaling-for-success/rising-techhubs-for-emerging-managers; see also Waverly 

Deutsch, “Women and Minority Investors 

Are Taking Matters into Their Own Hands,” 

Chicago Booth Review (May 10, 2021) available 

at https://www.chicagobooth.edu/review/womenand-minority-investors-are-taking-matters-theirown-hands.

106 See PitchBook-NVCA, supra note 57, at 19; 

see also James Thorne, “Corporate VC Firms 

Buck ‘Tourist’ Reputation with Pandemic 

Dealmaking,” PitchBook, (Sept. 28, 2020) 

available at https://pitchbook.com/news/articles/

corporate-vc-firms-pandemic-dealmaking-ratebucks-tourist-reputation; see also James Thorne, 

“What’s Driving Private Equity’s March on 

VC?,” PitchBook, (Sept. 8, 2021) available at

https://pitchbook.com/news/articles/privateequity-nontraditional-investors-vc-deals; see 

also Cameron Stanfill et al., “Crossing Over 

Into Venture,” PitchBook, (Apr. 20, 2021) at 2, 

available at https://pitchbook.com/news/reports/

q2-2021-pitchbook-analyst-note-crossing-overinto-venture. 

107 See PitchBook-NVCA, supra note 57. Excel 

“Alternative VC” tab.

108 Id. at 30. Excel “Alternative VC” tab; see

Richard Waters, “Venture Capital’s Silent Crash: 

When the Tech Boom met Reality,” Financial 

Times (Aug. 1, 2022) available at https://www.

ft.com/content/6395df7e-1bab-4ea1-a7eaafaa71354fa0.

109 See PitchBook, “US VC Valuations Report,” 

(Feb. 4, 2022) at 17, available at https://files.

pitchbook.com/website/files/pdf/2021_Annual_

US_VC_Valuations_Report.pdf.

110 See Miriam Gottfried and Laura Cooper, 

“Buyout Firms Seek $1 Trillion of New Funding 

Even as Markets Drop and Deal-Making Dries 

Up,” The Wall Street Journal (July 18, 2022) 

available at https://www.wsj.com/articles/

buyout-firms-seek-1-trillion-of-new-fundingeven-as-markets-drop-and-deal-making-driesup-11658136602.
ANNUAL REPORT: FISCAL YEAR 2022 | 99

111 See Marina Tempkin, supra note 88.

112 See PitchBook-NVCA, supra note 57, at 31. 

Excel “Exits x Type” tab. 

113 Id. at 32. Excel “Exits x Previous Round” tab. 

114 Includes issuers with a market capitalization of

$250 million or less.

115 Data on U.S. listed domestic firms was estimated

by DERA based on the Center for Research in 

Security Prices (CRSP) database. The analysis 

includes U.S. common stocks (share codes 10 and 

11) listed on NYSE, NYSE MKT and Nasdaq. 

The analysis excludes investment funds and 

trusts (Standard Industrial Classification codes 

6722, 6726, 6798, and 6799). A company with 

several classes of shares is counted once. Data for 

2022 represents the number of listed firms and 

market capitalization as of June 30, 2022.

116 See supra note 115 for a description of the 

methodology used to calculate this data. 

117 This graphic is based on DERA data, including

pooled funds. This data was collected from 

Thomson Financial’s SDC Platinum database. 

IPOs by small companies include IPOs by U.S. 

companies that after the non-SPAC offering 

have a size less than or equal to $250 million, 

calculated by multiplying price of the company’s 

stock at the close of the day of the offering by 

the number of outstanding shares on the day of 

the offering. IPOs by large companies include 

IPOs by companies that after the non-SPAC 

offering have a size greater than $250 million, 

calculated as described above. Data from the 

Center for Research in Securities Prices (CRSP), 

Dealogic, and Compustat were used to fill in 

missing information from SDC Platinum. Those 

companies with missing either (1) a stock price 

on the day of the offering or (2) a number 

of outstanding shares are not included in the 

statistics. The estimates provided in this graph 

for small public companies are based on the 

estimated market capitalization for the issuer on 

the date of the offering as provided in the abovelisted databases. There have been significant 

downward revisions in the most recent estimates 

as the market capitalization of issuers are 

corrected in the databases.

118 See supra note 117 for a description of the 

methodology used to calculate this data. The 

number shown on the top of the bar represents 

the total number of IPOs. The percentages not 

illustrated are IPOs by small foreign companies. 

See also Tom Zanki, “Small IPOs Buck Trends 

in an Otherwise Cold Market,” Law 360, (Aug. 

24, 2022) available at https://www.law360.

com/banking/articles/1523843/small-ipos-bucktrends-in-an-otherwise-cold-market. 

119 See Will Gornall and Ilya A. Strebulae, 

supra note 89, at 17. The study used market 

capitalization and enterprise value as of 

December 31, 2020. All other variables, 

including research and development dollar 

amount and number of patents, are from 

Compustat as of 2020 or the most recent fiscal 

year. VC classifications are from PitchBook, 

Thomson ONE, VentureSource, and manual 

matching. 

120 See Jeremy Greenwood et al., supra note 86, at 

7. This study is based on U.S. public companies 

between 1970 and 2014.

121 See “Smaller Reporting Company Definition,” 

Release Nos. 33-10513; 34-83550; File No. S7-

12-16 (June 28, 2018) available at https://www.

sec.gov/rules/final/2018/33-10513.pdf. 

122 See “Pay Ratio Disclosure,” Release Nos. 33-

9452; 34-70443; File No. S7-07-13 (Aug. 5, 

2015) at 89, available at https://www.sec.gov/

rules/proposed/2013/33-9452.pdf (providing 

estimates of the number of annual reports on 

Form 10-K based on a review of EDGAR filings 

in 2011). For comparability with the 2011 data, 

DERA staff estimated the number of annual 

reports on Form 10-K filed in 2021 based on a 

review of EDGAR filings.

123 See Bill Hortz, “The Microcap Universe: 

Overview and Opportunities,” Nasdaq, (June 

7, 2022) available at https://www.nasdaq.com/

articles/the-microcap-universe%3A-overviewand-opportunities; see also, Todd Lincoln, MBA, 

“What is Market Cap? Everything You Need 

to Know,” Medium, (Jan. 15, 2021) available 

at https://medium.com/the-investors-handbook/

market-cap-a474214c1368 (defining micro-cap 

as companies with market cap between $0M and 

$300 million, and small-cap as companies with 

market cap between $300M and $2 billion). 
100 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

124 This graphic is based on DERA data. Registered

offering data includes IPOs and registered 

secondary equity offerings, and was collected 

from Thomson Financial’s SDC Platinum 

database. Registered debt offerings have been 

excluded. Small public companies include 

U.S. public companies with a size less than 

or equal to $250 million on the date of the 

offering, calculated by multiplying the price 

of the company’s stock at the close of the day 

of the offering by the number of outstanding 

shares on the day of the offering. Data from 

CRSP, Dealogic, and Compustat were used to 

fill in missing information from SDC Platinum. 

Those companies with missing either (1) a stock 

price on the day of the offering or (2) a number 

of outstanding shares are not included in the 

statistics. The estimates provided in this graph 

for small public companies are based on the 

estimated market capitalization for the issuer on 

the date of the offering as provided in the abovelisted databases. There have been significant 

downward revisions in the most recent estimates 

as the market capitalization of issuers are 

corrected in the databases.

125 See supra note 124 for a description of the 

methodology used to estimate registered equity 

offerings by small public companies. This graphic 

includes the top industries based on the total 

proceeds raised in registered equity offerings 

by small public company during one of the 

respective periods, excluding offerings filed by 

pooled funds. Offerings for industries outside of 

these top industries accounted for approximately 

$0.9 billion and $0.3 billion in the twelve 

months ended June 2021 and 2022, respectively. 

Offerings by pooled funds, including SPACs, 

accounted for approximately $17 billion and 

$17 billion in the twelve months ended 2021 and 

2022, respectively.

126 See “Accelerated Filer and Large Accelerated 

Filer Definitions,” Release No. 34-88365; 

File No. S7-06-19,” (Apr. 23, 2020) at 

39, available at https://www.sec.gov/rules/

final/2020/34-88365.pdf (amending the 

accelerated and large accelerated definitions).

127 See Protiviti Global Business Consulting, “SOX 

Compliance Amid Rising Costs, Labor Shortages 

and Other Post-Pandemic Challenges (June 9, 

2022) at 5, available at https://www.protiviti.

com/sites/default/files/2022-10/protiviti_2022-

sox-compliance-survey_global.pdf. 

128 Id. Excludes external audit-related fees. 

129 See U.S. Securities and Exchange Commission, 

“Staff Report on the Issues Affecting the 

Provision of and Reliance Upon Investment 

Research Into Small Issuers,” (Feb. 18, 2022) 

at 7, available at https://www.sec.gov/files/staffreport-investment-research-small-issuers.pdf; see 

also Todd Lincoln, MBA, supra note 123.

130 See U.S. Securities and Exchange Commission, 

supra note 129, at 7. The Congressional 

Research Report defines small issuers as 

companies with market capitalization ranging up 

to $250 million, and large issuers as companies 

with market capitalization above $250 million.

131 Id. at 11-12, 45-46.

132 See IR Magazine, “Sample: Retail Investors 

Research Report Sponsored by Broadridge,” 

(Aug. 2021) at 3, 5, available at https://www.

thecorporatecounsel.net/member/memos/

Broadridge/08_21_report.pdf. See Garnet Roach, 

“Only Small Caps See Minority of Shares Held 

by Institutions, Research Shows,” IR Magazine, 

(Jan. 18, 2022) available at https://www.

irmagazine.com/small-cap/only-small-caps-seeminority-shares-held-institutions-shows-research.

133 See U.S. Small Business Administration Office 

of Advocacy, supra note 26, at 3. Ownership 

includes equal and majority ownership. 

134 Id. Ownership includes equal and majority 

ownership.

135 See PitchBook, “All In. Female Founders in 

the US VC Ecosystem,” (Nov. 2, 2022) at 

4, available at https://pitchbook.com/news/

reports/2022-all-in-female-founders-in-the-us-vcecosystem. Women-founded includes companies 

with at least one woman founder. Deal count is 

in Excel “VC deal activity” tab.

136 See Carta, “Annual Equity Report 2021,” (Dec. 

8, 2021) at 13, available at https://carta.com/

equity-summit/reports/2021/. 

137 See https://data.census.gov/

table?q=ab1900*&tid=ABSCB2019.

AB1900CSCB01&hidePreview=true&nkd=QDESC~B01. Percentages may not add to 100% 

due to rounding. Ownership includes majority 

ownership. 

138 See Robert Fairlie, supra note 39, at 8. See 

also Ewing Marion Kauffman Foundation, 

“Who is the Entrepreneur? New Entrepreneurs 

in the United States, 1996-2021,” (2022) at 

1, available at https://www.kauffman.org/

wp-content/uploads/2022/10/Kauffman_

Trends-in-Entrepreneurship-Who-Is-TheEntrepreneur-2021.pdf (noting that 39.9% of 

new entrepreneurs in 2021 were women). 
ANNUAL REPORT: FISCAL YEAR 2022 | 101

139 See January Ventures, supra note 34, at 7. 

140 Id. at 10.

141 See Kate Davidson and Aubree Eliza Weaver, 

“We Have a Lot of Work to do: Women and 

the Economy,” Politico Morning Money (June 

29, 2022) available at https://www.politico.

com/newsletters/morning-money/2022/06/29/

we-have-a-lot-of-work-to-do-women-and-theeconomy-00043029.

142 See Jeffrey Sohl, supra note 46, at 2.

143 Id.

144 See PitchBook-NVCA, supra note 57. Excel 

“Female Founder Activity” tab.

145 Id. 

146 Id. Excel “Female Founder Activity” tab and 

“Deal Activity” tab.

147 Id. Excel “Female Founder Activity” tab. 

148 See Carta, supra note 136, at 14.

149 See Jordan Rubio, “Check Out Where Female 

Founder Fundraising is Growing Fastest in 

the US,” PitchBook (Sept. 6, 2022) available 

at https://pitchbook.com/news/articles/femalefounders-metro-growth. The percentage 

illustrates the growth in capital raised from 2020 

to present compared to 2008-2019. 

150 See Dropbox DocSend, “The Funding Divide 

2022. Underrepresented Founders Get More 

Attention, but for Most, the Dollars Don’t 

Deliver,” (2022) at 3, available at https://try.

docsend.com/funding-divide-report.

151 Id. at 6. See Justin Izzo, “Gains in Fundraising 

Can’t Shake Off the Losses for Female and 

Minority Founders in 2021,” Dropbox DocSend

(Mar. 29, 2022) available at https://www.

docsend.com/blog/fundraising-gains-still-resultin-losses-for-female-and-minority-founders/.

152 See Dropbox DocSend, supra note 150, at 9-10.

153 Id. at 10.

154 See Engine, “Making the Startup Ecosystem 

More Equitable,” (Nov. 2021) at “Introduction”, available at https://static1.squarespace.

com/static/571681753c44d835a440c8b5/t/

6193d03ac7eb9c40442a6740/1637077051416/

Making+the+Startup+Ecosystem+More+Equitable+11.15.pdf.

155 See All Raise, “Against the Odds: 

Underrepresented Founders Report Positive 

Outlook on Business Despite Extra COVID-19 

Pressures,” available at https://www.allraise.org/

assets/gms069_infographic_desktop_1400px.

jpg. See also Juliana Garaizer, “The Rising 

Tide: A “Learning-By-Investing” Initiative to 

Bridge the Gender Gap,” Kauffman Fellows 

Report, (2016) at 53-54, available at http://

www.kauffmanfellows.org/wp-content/uploads/

KFR_Vol7/Juliana_Garaizar_vol7.pdf. 

156 See Yahoo! Finance, “PitchBook Report 

on Women in VC Ecosystem Highlights 

Resilience and Strong Performance of Female 

Founders Amid Market Headwinds (Nov. 

3, 2022) available at https://finance.yahoo.

com/news/pitchbook-report-women-vcecosystem-040100985.html?guccounter=1; see

PitchBook, supra note 135, at 21.

157 See Chengwei Liu et al. “The Case for Investing 

in Underdogs,” Harvard Business Review (July 

18, 2022) available at https://hbr.org/2022/07/

the-case-for-investing-in-underdogs.

158 See Carta, supra note 136, at 10.

159 See Ann Shepherd, “2021 Study of Gender 

Diversity on Private Company Boards,” 

Crunchbase News, (Mar. 29, 2022) available 

at https://news.crunchbase.com/business/himfor-her-2021-diversity-study-private-companyboards/; see Ann Shepherd and Gené Teare, 

“2020 Study of Gender Diversity on Private 

Company Boards,” Crunchbase News (Mar. 

1, 2021) available at https://news.crunchbase.

com/diversity/2020-diversity-study-on-privatecompany-boards/.

160 See Priyamvada Mathur, “Charting Female 

Founders’ Standout Year for VC Exits,” 

PitchBook (Feb. 18, 2022) available at https://

pitchbook.com/news/articles/female-foundersventure-capital-exits-charts. See PitchBookNVCA, supra note 57. Excel “Exit x Type” tab.

161 See “50/50 Women on Boards, “2022 Gender 

Diversity Index Report,” (Sept. 9, 2022) at 3-4, 

7, 9, available at https://5050wob.com/wpcontent/uploads/2022/09/5050WOB_Q2_2022_

GDI_Annual_Report.pdf. See also Alexandra 

Olson and the Associated Press, “Women Hold a 

Record Number of Corporate Board Seats. The 

Bad News: It’s Barely over 25%, and It’s Slowing 

Down,” Fortune (Sept. 30, 2022) available at

https://fortune.com/2022/09/30/how-manywomen-sit-corporate-boards-record-28-percentrussell-3000/. Data is as of June 30, 2022.

162 See Ryan Hibbison, “Female Founders Prove 

Resilient as They Seek Equal Share of VC 

Dollars,” Venture Capital Journal (Nov. 3, 2022) 

available at https://www.venturecapitaljournal.

com/female-founders-prove-resilient-as-theyseek-equal-share-of-vc-dollars/.

163 See Jeffrey Sohl, supra note 46, at 2.

164 Id.

165 See Gené Teare, “Something Ventured: FemaleFounded U.S. Venture Firms on Track to Raise 

over $7B in 2021,” Crunchbase News (Nov. 10, 

2021) available at https://news.crunchbase.com/

venture/female-founded-vc-firms-funds-data2021-something-ventured/.
102 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

166 See All Raise, “All Raise x Crunchbase VC 

Checkwriter Dashboard”, (as of 6/15/2022) 

available at https://allraise.org/all-raise-xcrunchbase-vc-checkwriter-dashboard. Per 

the All Raise x Crunchbase VC Checkwriter 

Dashboard, checkwriters are defined as those 

who can write checks, lead deals, and sit on 

boards. They are identified by their senior role 

within their firm (founder/co-founder, general 

partner, managing director or managing partner) 

and/or by a combination of the partner title and 

function as identified through board seats, press 

releases or deal association. This Dashboard 

tracks U.S.-based venture capital firms with over 

$25 million dollars in AUM.

167 See Imani Augustus, “Women Wanted: The 

Equity Gap in Venture Capital,” Alliance for 

Entrepreneurial Equity (Mar. 22, 2022) available 

at https://www.aeequity.org/product/womenwanted-the-equity-gap-in-venture-capital. This 

article was published by Third Way available at

(www.thirdway.org).

168 See Yahoo! Finance, supra note 156; see also

PitchBook, supra note 135, at 25.

169 See Imani Augustus, supra note 167.

170 See Aditya Aladangady and Akila Forde, 

“Wealth Inequality and the Racial Wealth Gap,” 

Board of Governors of the Federal Reserve, 

(Oct. 22, 2021) at Figure 1, available at https://

www.federalreserve.gov/econres/notes/fedsnotes/wealth-inequality-and-the-racial-wealthgap-20211022.html#fig1. In this data set, 

primary residence is included in a household’s 

net worth (see Figure 3). “White,” “Black/

African American” and “Other” excludes any 

respondents indicating Hispanic/Latino. “Other” 

includes Asian American/Pacific Islander, Native 

American/Alaska Native, Native Hawaiian, 

other race, and all respondents reporting more 

than one racial identification. Because of small 

sample sizes, there was not statistical power to 

further disaggregate this group of families. In 

2019, families reporting more than one racial 

identification were the largest subgroup of the 

other or multiple race group (about 69 percent 

of families), followed by Asian families (about 

23 percent of families). Because of the varied 

composition of the other group and changes 

in its composition over time, readers should 

exercise caution when making inferences. See

Neil Bhutta et al., “Disparities in Wealth by Race 

and Ethnicity in the 2019 Survey of Consumer 

Finances,” Board of Governors of the Federal 

Reserve System, (Sept. 28, 2020) at Figure 3, 

available at https://www.federalreserve.gov/

econres/notes/feds-notes/disparities-in-wealthby-race-and-ethnicity-in-the-2019-survey-ofconsumer-finances-20200928.html.

171 Id.

172 See Kristen E. Broady, Ph.D and Cynthia Hester, 

Ph.D, “Reducing the Racial Financial Health 

Gap: The Opportunity for Responsible Fintech,” 

PayPal, (Sept. 30, 2021) at 8, available at https://

publicpolicy.paypal-corp.com/sites/default/

files/2021-11/PP-Reducing-the-Racial-FinancialHealth-Gap.pdf. 
ANNUAL REPORT: FISCAL YEAR 2022 | 103

173 See Federal Reserve Banks, “Economic WellBeing of U.S. Households in 2021,” (May 2022) 

at 43-44, available at https://www.federalreserve.

gov/publications/files/2021-report-economicwell-being-us-households-202205.pdf. “Fully 

banked” households had a bank account and, 

in the past 12 months, did not use any of the 

alternative financial services asked about in the 

survey. “Underbanked” households are those for 

whom the banking services they accessed appear 

to have been insufficient to meet their financial 

service needs. “Unbanked” households had 

no bank account; Less than 50% of unbanked 

households used alternative financial services. 

174 See Kristen E. Broady, Ph.D and Cynthia Hester, 

Ph.D, supra note 172, at 12. See also Federal 

Reserve Banks, supra note 173, at 43. 

175 See Chris Horymski, “What Is the Average 

Credit Score in the U.S.?,” Experian (Feb. 22, 

2022) available at https://www.experian.com/

blogs/ask-experian/what-is-the-average-creditscore-in-the-u-s/. 

176 See Kristen E. Broady, Ph.D and Cynthia Hester, 

Ph.D, supra note 172, at 12.

177 See Federal Reserve Banks, “Small Business 

Credit Survey: 2022 Report on Firms Owned 

by People of Color,” (June 29, 2022) at 15, 

available at https://www.fedsmallbusiness.org/

survey/2022/2022-report-on-firms-ownedby-people-of-color. Note: Findings for Native 

American-owned firms are omitted from this 

report because sample sizes are too small to 

make precise estimates for most measures. 

178 See Quentin Brummet and Katie Johnson, 

“Understanding the American Entrepreneurial 

Landscape: A New Resource,” Entrepreneurship 

in the Population (EPOP) (Oct. 19, 2022) at 6, 

available at https://epop.norc.org/content/dam/

epop/media/publications/pdf/epop2022-brief_

american_entrepreneurship.pdf. Note: “Other” 

includes non-Hispanic multi-race, non-Hispanic 

other reported races, and not reported. 

179 See Babson College, “Global Entrepreneurship 

Monitor (GEM) 2021/2022 United States 

Report,” (2022) at 70-73, available at https://

issuu.com/babsoncollege/docs/gem-2021-2022-

us-report. 

180 Id. at 72-73. "Established business activity" is 

defined as ownership/management of businesses 

more than three and a half years old. 

181 See Marc Morial and Jon Cowan, “America’s 

Entrepreneurial Equity Crisis is Hurting 

the Economy,” Fortune, (May 25, 2022) 

available at https://fortune.com/2022/05/25/

america-entrepreneurial-equity-crisis-hurtingeconomy-george-floyd-black-startups-businessdiscrimination-solutions-morial-cowan/.

182 See Dropbox DocSend, supra note 150, at 10-11.

183 Id. at 11.

184 See Dropbox DocuSend, supra note 61, at 14-15.

185 See Jeffrey Sohl, supra note 46, at 2; see Jeffrey 

Sohl, “The Angel Market in 2020: Return of the 

Seed and Start-Up Stage Market for Angels,” 

Center for Venture Research, (May 5, 2021) at 

2, available at https://paulcollege.unh.edu/sites/

default/files/resource/files/2020-analysis-report_.

pdf; see Jeffrey Sohl, “The Angel Market in 

2019: Commitments by Angels Increase with a 

Significant Rise in Deal Valuations,” Center for 

Venture Research, (May 5, 2020) at 2, available 

at https://scholars.unh.edu/cgi/viewcontent.

cgi?article=1032&context=cvr. 

186 See Jeffrey Sohl, supra note 46, at 2. See Jeffrey 

Sohl, supra note 185, at 2.

187 See Yoon Sun Hur, “Analysis of Capital 

Access for Entrepreneurs of Color,” Nasdaq 

Entrepreneurial Center Venture Equity Project, 

(2022) available at https://evidence2impact.

psu.edu/project/pre-seed-and-seed-funding-forentrepreneurs-of-color/.

188 Id. See also Nasdaq Entrepreneurial Center, 

“The Venture Equity Project,” (2022) available 

at https://thecenter.nasdaq.org/vep/; see also

Gené Teare, “Funding to Latine-Founded US 

Companies Falls Sharply in 2022,” Crunchbase 

News, (Oct. 26, 2022) available at https://

news.crunchbase.com/diversity/us-based-latinefounded-companies-funding-falls/ (noting that 

Hispanic/Latino founders received 2.5% of VC 

dollars); see also Gené Teare, “VC Funding to 

Black-Founded Startups Slows Dramatically 

as Venture Investors Pull Back,” Crunchbase 

News, (June 17, 2022) available at https://news.

crunchbase.com/diversity/vc-funding-blackfounded-startups/ (noting that African American/

Black founders received 1.3% of VC dollars).
104 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

189 See MetLife and U.S. Chamber of Commerce, 

“Special Report on Small Business and LGBTQ+ 

Inclusion,” (June 9, 2022) at 5, available at

https://www.uschamber.com/assets/documents/

SBI_PulseSurvey_June2022_Final_v4.pdf. 

190 See Hello Alice Report, “The LGBTQ+ 

Economy. A Closer Look at the Trends and 

Triumphs of New Majority Small Business 

Owners in 2022,” (June 2022) at 11, 

available at https://helloalice.com/wp-content/

uploads/2022/06/LGBTQ-Economy-Report_

Update.pdf.

191 See “LGBTQ-Owned Small Businesses in 2021. 

The Financial Health & Needs of LGBTQ Firms 

in the Small Business Credit Survey,” Center for 

LGBTQ Economic Advancement & Research 

and Movement Advancement Project, (July 20, 

2022) at 10, available at https://lgbtq-economics.

org/wp-content/uploads/2022/08/LGBTQOwned-Small-Businesses-in-2021-July-2022.pdf. 

The report defined LGBTQ-owned businesses as 

those where individuals who identify as lesbian, 

gay, bisexual, transgender, or queer own 50% or 

more of the business. 

192 See Diego Mariscal, “Entrepreneurship is a 

Pathway for Founders with Disabilities to 

Address Wealth and Employment Gaps”, 

Ewing Marion Kauffman Foundation, (Oct. 26, 

2022) available at https://www.kauffman.org/

currents/2gether-international-entrepreneurswith-disabilities/.

193 See National Disability Institute, “Small 

Business Ownership by People with 

Disabilities: Challenges and Opportunities,” 

(Apr. 2022) at 12, available at https://www.

nationaldisabilityinstitute.org/wp-content/

uploads/2022/07/ndi-small-business-researchreport.pdf.

194 Id.

195 Id. at 24. Roughly 24% did not apply for a loan 

due to a belief that they would be denied.

196 See Diego Mariscal, supra note 192. 

197 See Jeffrey Sohl, supra note 46, at 1-2. See Jeffrey 

Sohl, supra note 185, at 2.

198 See Johan Cassel et al., “Racial Diversity in 

Private Capital Fundraising,” National Bureau 

of Economic Research, (Sept. 2022) at 2-3, 

available at https://www.nber.org/system/files/

working_papers/w30500/w30500.pdf (citing 

https://knightfoundation.org/reports/knightdiversity-of-asset-managers-research-seriesindustry/).

199 See BLCK VC, “State of Black Venture. A 

Comprehensive Study of the Black Venture 

Ecosystem,” (2022) at 13, available at https://

www.blckvc.org/state-black-venture. 

200 See Mahira Dayal, “The Most and Least Diverse 

Venture Capital Firms,” The Information’s 

Diversity Index, (Feb. 22, 2022) available at

https://www.theinformation.com/articles/themost-and-least-diverse-venture-capital-firms. 

201 See BLCK VC, supra note 199, at 7.

202 See LATINX VC, “State of Latinx VCs. First 

Annual Report,” at 3, available at https://

uploads-ssl.webflow.com/613a3a58a5faf7d03f5df48f/6157581069a40d7be7375a2d_

LatinxVCs_state.pdf. 

203 See Mahira Dayal, supra note 200.

204 See LATINX VC, supra note 202, at 4. 

205 See BLCK VC, supra note 199, at 18. 

206 See Johan Cassel et al., supra note 198, at 4, 6. 

207 See BLCK VC, supra note 199, at 24.

208 See Diversity VC, “The Equity Record,” (Nov. 

9, 2022) at 16, available at https://diversity.vc/

diversity-vc-report-2022-usa/. 

209 Based on Russell 3000 company data. See ISS 

Insights, “Racial and Ethnic Diversity on U.S. 

Corporate Boards – Progress Since 2020 (July 26, 

2022) available at https://insights.issgovernance.

com/posts/racial-and-ethnic-diversity-on-uscorporate-boards/. 

210 Id. 

211 See Brianna Funderburk and Lucas Misera, 

“The Impact of Natural Disasters on Small 

Businesses,” Fed Small Business, (Nov. 15, 2022) 

available at https://www.fedsmallbusiness.org/

analysis/2022/the-impact-of-natural-disasters-onsmall-businesses.

212 See Martin Hiti et al., “Small Business Recovery 

After Natural Disasters,” (Sept. 6, 2022) 

available at https://libertystreeteconomics.

newyorkfed.org/2022/09/small-businessrecovery-after-natural-disasters/.

213 See Martin Hiti et al., “How do Natural 

Disasters Affect U.S. Small Business 

Owners,” (Sept. 6, 2022) available at https://

libertystreeteconomics.newyorkfed.org/2022/09/

how-do-natural-disasters-affect-u-s-smallbusiness-owners/.

214 See National Centers for Environmental 

Information, “Billion-Dollar Weather and 

Climate Disasters,” (accessed December 6, 2022) 

available at https://www.ncei.noaa.gov/access/

billions/events/US/2022?disasters[]=all-disasters. 

Note that NOAA tracks events on a calendar 

basis and we have combined natural disaster 

events that straddle calendar years. 
ANNUAL REPORT: FISCAL YEAR 2022 | 105

215 The estimated losses cover the period from

October 1, 2021 through September 30, 2022. 

See https://www.ncei.noaa.gov/access/billions/

events. This estimate, however, does not include 

estimated losses from Hurricane Ian, which 

could cost insurers $40 billion or more. See

Chris Isidore, “Hurricane Ian could be Florida’s 

Costliest Storm Ever,” CNN, (Sept. 30, 2022) 

available at https://www.cnn.com/2022/09/30/

business/hurricane-ian-cost/index.html. See

Max Zahn, “Hurricane Ian Could Cause $75 

Billion in Damage,” ABC News, (Oct. 3, 2022) 

available at https://abcnews.go.com/Business/

hurricane-ians-damage-reach-65-billion/

story?id=90693223.

216 See Federal Reserve Banks, supra note 40. Data 

from data appendix Excel tab “Disaster-impacted 

firms.”

217 Id. 

218 Data from the 2020 5-year American

Community Survey (ACS) was used by DERA 

to estimate the population in zip codes affected 

by the natural disasters as described in infra note 

219. However, certain zip codes were identified 

as missing population values, so the percentage is 

likely underestimated.

219 This graphic is based on DERA data. Evaluated

from July 1, 2019 to June 30, 2022 using zip 

codes affected by natural disasters, excluding 

COVID-19 Pandemic. Zip codes designated 

as affected are defined as having one or more 

residents approved for housing assistance under 

FEMA’s IHP program for natural disasters with 

classifications of Major Disaster Declaration and 

incident start dates between July 1, 2019 and 

June 30, 2022. Given the trailing impact caused 

by natural disasters, each zip code affected in that 

three year period was included. Classification 

of disaster areas are based on FEMA Disaster 

Declaration Summaries data and FEMA 

Housing Assistance Program Data available 

at https://www.fema.gov/about/openfema/

data-sets, updated on September 15, 2022. The 

classification method for disaster areas is based 

on the methodology in the “2017 Small Business 

Credit Survey – Report on Disaster-Affected 

Firms,” Federal Reserve Banks of Dallas, New 

York, Richmond, and San Francisco, available at

https://www.newyorkfed.org/medialibrary/media/

smallbusiness/2017/SBCS-Report-on-DisasterAffected-Firms.pdf.

220 Evaluated from July 1, 2019 to June 30, 2022

using zip codes affected by natural disasters as 

described in supra note 219.

221 See Kenan Fikri, “Restoring Well-Being and 

Entrepreneurship in Rural America,” Federal 

Reserve Bank of St. Louis – “Investing in Rural 

Prosperity,” (2021) at 99, available at https://

www.stlouisfed.org/community-development/

publications/invest-in-rural.

222 Id. at 97.

223 See U.S. Census, “2020 Business Dynamics 

Statistics Datasets” available at https://www.

census.gov/programs-surveys/bds.html. Data 

pulled as of 11/15/2022. Specific data pulled: 

https://www.census.gov/data/datasets/time-series/

econ/bds/bds-datasets.html. Metro/Non-Metro 

by Firm Age and Metro/Non-Metro. 

224 See Deb Martin, “Fostering a Culture of 

Entrepreneurship and Innovation in Rural 

Communities,” Federal Reserve Bank of St. 

Louis – “Investing in Rural Prosperity,” (2021) 

at 268, available at https://www.stlouisfed.org/

community-development/publications/invest-inrural. 

225 See Federal Reserve Banks, supra note 40. Data 

from data appendix Excel “Geography” tab. The 

percentage of U.S. Rural Small Businesses is a 

percentage of the total U.S. rural small businesses 

broken down by Census division. The U.S. Rural 

Small Businesses will total 100%. The percentage 

of small businesses in the region is the percentage 

of small business that are rural as compared 

to all small businesses within each individual 

Census division. The small businesses in the 

region percentage was calculated based on the 

Fed Small Business Survey Employer Firms report 

data. Since the small businesses in the region 

percentage is based on a calculation within each 

Census region the aggregate percentages across 

the U.S. regions will not total 100%. 

226 See Matt Dunne, “Small-Town Tech Towns: 

Where Scalable Entrepreneurship Is Propelling 

Rural Growth,” Federal Reserve Bank of St. 

Louis - “Investing in Rural Prosperity,” (2021) 

at 320-322, available at https://www.stlouisfed.

org/community-development/publications/investin-rural. 

227 See Federal Reserve Banks, supra note 40. Data 

from data appendix Excel “Geography” tab.
106 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

228 See BankFind Suite: Institution and Peer Group 

Comparisons, FDIC, (accessed December 6, 

2022) available at https://banks.data.fdic.gov/

bankfind-suite/peergroup/standard?comparisonType=assetSize&incomeBasis=YTD%-

2CYTD%2CYTD%2CYTD%2CYTD%-

2CYTD%2CYTD%2CYTD%2CYTD%-

2CYTD%2CYTD&peerGroups=allInst%2ClessThan100M%2ClessThan100M%2C100Mto1B%2C100Mto1B%2C1Bto10B%2C1Bto10B%2C10Bto250B%2C10Bto250B%2CgreaterThan250B%2CgreaterThan250B&pgcStep=-

step2&reportPeriod=20220630%2C1992033

1%2C20220630%2C19920331%2C202206

30%2C19920331%2C20220630%2C19920

331%2C20220630%2C19920331%2C2022

0630&reportType=assets-and-liabilities&sortField=CERT&sortOrder=ASC&unitType=%2

4%2C%24%2C%24%2C%24%2C%24%2C

%24%2C%24%2C%24%2C%24%2C%24

%2C%24; see also Oscar Perry Abello, “Small 

Banks Save Small Businesses, So Why Aren’t 

There More Small Banks?” Next City, (May 12, 

2020) available at https://nextcity.org/urbanist-news/small-banks-save-small-businesses-sowhy-arent-there-more-small-banks.

229 See CRA, “National Aggregate Reports,” 

FFIEC, (accessed December 6, 2022) available 

at https://www.ffiec.gov/craadweb/national.

aspx. Small business loans are defined as those 

whose original amounts are $1 million or less 

and were reported as either Loans secured 

by nonfarm or nonresidential real estate or 

Commercial and Industrial loans in Part I of the 

Consolidated Reports of Condition and Income 

(Schedule RC-C, Part II). See also Kenan Fikri, 

“Policy Responses to the Great Recession Failed 

Entrepreneurs; We Can’t Make that Mistake 

Again,” Economic Innovation Group, (Mar. 25, 

2020) available at https://eig.org/lessons-fromthe-great-recession/; see also Kenan Fikri, supra

note 221, at 98.

230 See Federal Reserve Banks, supra note 40. Data 

from data appendix Excel “Geography” tab.

231 Data from the 2020 5-year American

Community Survey (ACS) was used by DERA 

to estimate the population in zip codes in rural 

areas. Classification of rural areas are based 

on the updated list of 2022 End of Year rural 

area zip codes from the Center for Medicare & 

Medicaid Services available at https://www.cms.

gov/Medicare/Medicare-Fee-for-Service-Payment/

FeeScheduleGenInfo. 

232 See Federal Reserve Banks, supra note 40 at 25.

233 This graphic is based on DERA data.

Classification of rural areas are based on the 

updates list of 2022 End of Year rural area zip 

codes from the Center for Medicare & Medicaid 

Services, as described in supra note 231. 

234 See, e.g., “Small and Emerging Businesses” 

section of the Report above, at 23.

235 See, e.g., “Women Business Owners and 

Investors” section of the Report above, at 45, 

and “Minority Business Owners and Investors” 

section of the Report above, at 56-57. 

236 See Transcript of the 41st Annual SEC Small 

Business Forum, Empowering Entrepreneurs: 

Tools to Navigate Capital Raising (April 4, 

2022) at 65, available at https://www.sec.gov/

files/transcript-empowering-entrepreneurs.pdf. 

237 See, e.g., “Women Business Owners and 

Investors” section of the Report above, at 53. 

238 See, e.g., “Minority Business Owners and 

Investors” section of the Report above, at 60. 

239 See, e.g., “Women Business Owners and 

Investors” section of the Report above, at 52, 

and “Minority Business Owners and Investors” 

section of the Report above, at 53. 

240 See e.g., “What is the Role of Accredited 

Investors?” available at https://www.sec.gov/

education/capitalraising/building-blocks/

accredited-investor. 

241 See, e.g., “Minority Business Owners and 

Investors” section of the Report above, at 54.

242 See e.g., “State of Small Business Capital 

Formation” section of the Report above, at 18. 

243 See Office of Information and Regulatory 

Affairs, Office of Management and Budget, 

U.S. Securities and Exchange Commission 

Agency Rule List (Spring 2022) available 

at https://www.reginfo.gov/public/do/

eAgendaViewRule?pubId=202204&RIN=3235-

AN04.

244 See, e.g., “Minority Business Owners and 

Investors” section of the Report above, at 54.

245 See, e.g., “Rural Communities” section of the 

Report above, at 66.

246 Under the COVID-19 relief in place from May 4,

2020 through August 28, 2022, issuers offering 

$250,000 or less in a 12-month period could 

fulfill the financial statement requirements by 

providing financial statements of the issuer and 

certain information from the issuer’s Federal 

income tax returns, both certified by the principal 

executive officer. Currently, for offerings of 

greater than $124,000, but less than $618,000, 

the issuer must provide financial statements that 

have been reviewed by a public accountant that 

is independent of the issuer. 

247 See e.g., “State of Small Business Capital 

Formation” section of the Report above, at 18.
ANNUAL REPORT: FISCAL YEAR 2022 | 107

248 Currently, for offerings of greater than $124,000,

but less than $618,000, the issuer must provide 

financial statements that have been reviewed by 

a public accountant that is independent of the 

issuer.

249 See “Temporary Amendments to Regulation 

Crowdfunding,” Release No. 33-10781 (May 

4, 2020), available at https://www.sec.gov/rules/

interim/2020/33-10781.pdf.

250 See 17 CFR 227.100(b)(3) available at https://

www.ecfr.gov/current/title-17/chapter-II/part-227/

subpart-A/section-227.100.

251 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.

252 See e.g., “State of Small Business Capital 

Formation” section of the Report above, at 13.

253 See, e.g., “Small and Emerging Businesses” 

section of the Report above, at 23.

254 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. 13, 2020) 

at 4, available at https://www.sec.gov/rules/

exorders/2020/34-90112.pdf. 

255 Market participants look at staff guidance when

trying to determine whether broker registration 

is require. See Notice of Proposed Exemptive 

Order, supra note 254 at 15. 

256 See, e.g., “Women Business Owners and 

Investors” section of the Report above, at 47-

49, “Minority Business Owners and Investors” 

section of the Report above, at 57-58, and 

“Rural Communities” section of the Report 

above, at 66.

257 See Ewing Marion Kauffman Foundation, 

“Inclusive Entrepreneurial Ecosystems are our 

Moral and Economic Imperative,” (Oct. 19, 

2022) available at https://www.kauffman.org/

currents/inclusive-entrepreneurial-ecosystemsmoral-economic-imperative/. 

258 See Notice of Proposed Exemptive Order, supra

note 254. 

259 See U.S. Securities and Exchange Commission 

Agency Rule List (Spring 2022), supra note 243.

260 See “What Happens if a Startup Does not 

Comply with Securities Laws?” available at

https://www.sec.gov/education/capitalraising/

building-blocks/noncompliance.

261 See, e.g., “Small and Emerging Businesses” 

section of the Report above, at 23, and “Mature 

and Later-Stage Companies” section of the 

Report above, at 35. 

262 See, e.g., “Small and Emerging Businesses” 

section of the Report above, at 29 and 30.

263 See, e.g., “Mature and Later-Stage Companies” 

section of the Report above, at 33.

264 See Transcript of the 41st Annual SEC Small 

Business Forum, New Investor Voices: How 

Emerging Fund Managers Are Diversifying 

Capital (April 6, 2022), available at https://

www.sec.gov/files/transcript-new-investor-voices.

pdf. See, e.g., “Small and Emerging Businesses” 

section of the Report above, at 29, and “Mature 

and Later-Stage Companies” section of the 

Report above, at 36.

265 See, e.g., “Mature and Later-Stage Companies” 

section of the Report above, at 36 and 38.

266 See, e.g., “Women Business Owners and 

Investors” section of the Report above, at 53, 

and “Minority Business Owners and Investors” 

section of the Report above, at 60.

267 See Transcript of the 41st Annual SEC Small 

Business Forum, New Investor Voices, supra note 

264 at 27-29.

268 See Transcript of the 41st Annual SEC Small 

Business Forum, New Investor Voices, supra note 

264 at 29. 

269 See Letter from the SEC Small Business Capital 

Formation Advisory Committee to Chair Gary 

Gensler (May 20, 2021) available at https://

www.sec.gov/spotlight/sbcfac/encouraging-smallregional-funds-043021.pdf. 

270 See Transcript of the Small Business Capital 

Formation Advisory Committee Meeting, 

Entrepreneurship Hubs and the IPO Market, 

(Oct. 13, 2022) available at https://www.sec.gov/

info/smallbus/acsec/sbcfac-transcript-101322.pdf. 

271 See Transcript of the 41st Annual SEC Small 

Business Forum, Small Cap World: What to 

Know and How to Think Ahead (April 7, 2022) 

at 46, available at https://www.sec.gov/files/

transcript-small-cap-world.pdf.
108 | SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION

272 See, e.g., “Rule 10b5-1 and Insider Trading,” 

Release Nos. 33-11013; 34-93782; File No. 

S7-20-21 (Jan. 13, 2022), available at https://

www.sec.gov/rules/proposed/2022/33-11013.

pdf (while the Commission did not propose to 

exempt smaller reporting companies from the 

new disclosures, those companies would be 

permitted to limit their disclosures consistent 

with the scaled approach to their executive 

compensation disclosures); “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 (proposing 

to exempt smaller reporting companies from 

some of the new disclosure requirements, and 

proposing a delayed compliance date); “Pay 

Versus Performance,” Release No. 34-95607; 

File No. S7-07-15 (Aug. 25, 2022), available at

https://www.sec.gov/rules/final/2022/34-95607.

pdf (adopting scaled requirements for smaller 

reporting companies, but not delaying the 

compliance date for those companies). 

273 See, e.g., “Share Repurchase Disclosure 

Modernization,” Release No. 34-93783; 

IC-34440; File No. S7-21-21 (Dec. 15, 

2021), available at https://www.sec.gov/rules/

proposed/2021/34-93783.pdf; “Cybersecurity 

Risk Management, Strategy, Governance, and 

Incident Disclosure,” Release Nos. 33-11038; 

34-94382; IC-34529; File No. S7-09-22 (Mar. 

9, 2022), available at https://www.sec.gov/rules/

proposed/2022/33-11038.pdf. 

274 See, e.g., “Small Public Companies” section of 

the Report above, at 43 and 44.

275 See, e.g., “Small Public Companies” section of 

the Report above, at 39. 

276 See Transcript of the Small Business Capital 

Formation Advisory Committee Meeting (May 

6, 2022) at 53, available at https://www.sec.gov/

info/smallbus/acsec/sbcfac-transcript-050622.pdf.

OFFICE OF THE 

ADVOCATE FOR SMALL 

BUSINESS CAPITAL 

FORMATION

U.S. Securities and 

Exchange Commission

100 F Street NE

Washington, DC 20549

202.551.5407

www.sec.gov/oasb

smallbusiness@sec.gov