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Annual 

Report 

FISCAL YEAR 2023 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNU 

 

Entrepreneurs continue to face a 

considerable gap in accessing capital 

through every stage of the business 

cycle. While there have been some 

advances in identifying and addressing 

barriers to accessing capital, there is 

much more work to do.

 EWING MARION KAUFFMAN FOUNDATION.1
Contents 

MISSION: Who We Are POLICY: Recommendations 

DATA: State of Capital Formation 

4 21 30 

1 70 72 78 

Private 

offering 

changes 

Small and Emerging Mature and Initial Public 

Businesses and Exempt Later-Stage Offerings and Small 

Offering Data Businesses Public Companies 

39 

Women Founders 

and Investors 

63 

Natural Disaster 

Areas 

50 

Diverse Founders 

and Investors 

65 

Rural 

Communities 

Expand 

educational 

resources 

80 

Support 

emerging fund 

managers 

ADVOCACY: 

What We Do 

86 

ENDNOTES: 

All the Details 

Avenues connecting 

businesses and 

investors 

83 

Scale and harmonize 

small public company 

requirements 

COMMITTEE: 

Highlights 

94 

OFFICE: 

Meet the Team 

102 121 
Contents 

MISSION | Who We Are

Introduction 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

MISSION

Who We Are 
T

he Small Business Advocacy Office is an independent office that was established in January 

2019 via the bipartisan SEC Small Business Advocate Act of 2016 to advance the interests of 

small businesses and their investors at the SEC and in the capital markets, from early-stage 

startups raising initial capital, to later-stage private companies whose founders and investors 

are seeking liquidity, all the way to smaller public companies. The Office proactively works to 

identify and address unique challenges faced by women-owned, diverse, rural, and natural disaster 

area small businesses and their investors. We advocate for small businesses and their investors in 

raising capital by 

ANALYZING 

capital-raising 

trends, including 

the impact of rules 

and regulations 

ENGAGING 

through 

outreach and 

education 

HELPING 

navigate securities 

laws and other 

issues via education 

and policy 

recommendations 

Contents 

MISSION | Who We Are 

Introduction 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

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 raising 

capital, 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. 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 1 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 

DATA

State of Capital 

Formation 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

2 
Why data? 

We seek to provide a comprehensive snapshot of the state of U.S. small business capital formation, 

ANALYZING 

capital-raising 

trends, including 

the impact of rules

and regulations 

bringing together 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. Data reflecting the 

successes and challenges small businesses face in capital-raising supplements the feedback and other 

anecdotal evidence our Office receives throughout the year. Informed by this data, we can better identify 

what tools, strategies, and approaches would be most helpful in crafting policy solutions. The 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 data and analysis from third parties. 

Where to start? 

To allow small businesses, investors, and market participants to find the data that is most relevant to 

them, we have organized this report by life cycle stage of the business. LIFE CYCLE STAGE 

Small and emerging 

businesses 

Mature and later-stage 

businesses Small public companies 

COMMON

FUNDING

SOURCES 

Self-funding 

Grants 

Loans 

Friends and family 

Crowdfunding 

Angel investors 

Incubator/Accelerator 

Pre-seed and seed 

VC funds 

Corporate venture capital 

Family offices 

Initial public offering (IPO) 

Other registered offerings 

Exempt offerings 

(e.g., private placements 

or offshore offerings) 

BUSINESS

 STAGE 

Businesses range 

from small businesses 

creating local jobs 

to high-growth 

startups raising capital 

to launch prototypes 

and products. 

These businesses 

are generally growing and 

looking for larger amounts 

of capital 

to fund operations 

of scale, ventures into new 

product lines, 

and preparation for public 

markets. 

These later-stage 

businesses have access 

to a larger pool of capital, 

enhanced liquidity, 

reputational benefits and 

are subject to rigorous SEC 

reporting requirements. 

TOP INDUSTRIES

RAISING

CAPITAL2

Given the wide 

ranging options for 

funding, the top industries 

vary based 

on funding source. 

Software, commercial 

products and services, 

pharma and biotech, health 

care, consumer goods and 

services, IT hardware and 

energy. 

Health care, business 

services, technology, 

manufacturing, banking 

and financial services, and 

hospitality, retailing, and 

restaurants. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 3 
 

 

Introduction

Small and Emerging Businesses

and Exempt Offering Data

Mature and Later-Stage Businesses

Initial Public Offerings and Small

Public Companies

Women Founders and Investors

Diverse Founders and Investors

Natural Disaster Areas

Rural Communities

POLICY | Recommendations

ADVOCACY | What We Do

COMMITTEE | Highlights

ENDNOTES | All the Details

OFFICE | Meet the Team

Small and Emerging 

Businesses and Exempt 

Ofering Data 

T

his segment of companies includes both small businesses that create local jobs but may not fit 

the high-growth model that is the typical target of venture capital (VC) investments as well as 

high-growth startups that may ultimately fit the VC model but are still seeking capital to get off 

the ground and launch early prototypes.3 

Why is access to capital for small businesses so important? 

Small businesses are critical to the overall economy. 

OPEN 

43.5% 

99.9% of all businesses are of the U.S. GDP 

small businesses is created by 

(33.2 million businesses).4 5 small businesses.

Small businesses created Nearly 1 in 5 adults 

63% 

of net new jobs is founding a business 

(17.3 million) from 1995-2021.6 or has done so in the past 31⁄2 years.7 

“

Capital is the lifeblood of business. 

REIMAGINE MAIN STREET 8 

Contents

MISSION | W SION | Who We Are 

DATA | State of Capital F e of Capital Formation

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 4 
Introduction

Small and Emerging Businesses

and Exempt Offering Data

Mature and Later-Stage Businesses

Initial Public Offerings and Small

Public Companies

Women Founders and Investors

Diverse Founders and Investors

Natural Disaster Areas

Rural Communities

POLICY | Recommendations

ADVOCACY | What We Do

COMMITTEE | Highlights

ENDNOTES | All the Details

OFFICE | Meet the Team

Early-stage entrepreneurs report financial challenges and need 

support to access capital to build their companies. 

An increasing percentage of small businesses continue to experience 

financial challenges.9

 

 

 

 

Access to capital remains a barrier to entry and growth for entrepreneurs. 

90% of new businesses with employees 

Access 

to Capital 

need external capital at the start 10. 

78% of small business owners are concerned 

11 about their ability to access capital. 

Over 50% of small businesses seeking 

capital needed less than $50,000.

12

55% of small business owners found it 

harder to access capital than in prior years.13 

3.7x more startups failed in 2022 due to 

lack of financing or investors than in 2020.14 

Contents

MISSION | W SION | Who We Are 

DATA | State of Capital F e of Capital Formation

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 5 
Small businesses need resources, knowledge, and connections to operate 

and grow their business; however, many startups struggle to find each of 

these critical pieces.15 

Financial 

R esour c es 

70% of startups 

experience financial 

challenges Knowledge

and Know-How

76%of startups

experience challenges

with finding support

or resources 

Professional

Connections

22%of startups 

struggle to find advice

or role models 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Aspiring entrepreneurs often seek advice and support from family or friends.16 Public Companies 

Family members 61% 

Friends or acquaintances 55% 

Established business leaders 20% 

Other business professionals 24% 

Entrepreneurial support organizations, like accelerators and incubators, are 

designed to provide resources to early-stage, and rapid-growth startups.17 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

Funding opportunities, 

including “demo day” events, 

investor introductions, 

grants, and equity financing18

Network building and 

connections to mentors, 

as well as opportunities to 

be a part of an 

entrepreneurial 

community19 

Guidance and resources 

such as education, training, 

advisory and legal counsel, 

and physical space20 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 6 
Where do small and emerging businesses turn for capital when 

facing financial challenges?21

Personal funds 53% Businesses with 4 

or fewer employees 

are more likely to use 

Cash reserves 53% personal 

savings

compared to small External financing (with repayment) 42% businesses with more

than 20 employees.22

Grants or donations 18% 

Of the small businesses that sought 

external financing, 

only 8% sought equity investments.23

Small businesses continue to struggle to shore up their capital needs. 

Each year, 14% of 50% of small businesses 

established businesses report that they have 

need additional capital, but delayed plans to grow 

nearly half their business in response of them do 

to higher interest rates.

25 not apply for it.24

40% of small businesses applied for a loan,

line of credit, and/or cash advance. About half of 

those were fully funded, while roughly 21% did not 

receive any funding.26

None 21% Most 13% 

Some 13% All (53%) 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 7 
Angel investors remain a significant source of early-stage 

capital, despite a drop in deal volume and size. 

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. 

367,945 active angel investors 

(1.2% increase from 2021)27 

62,325 entrepreneurial ventures received angel funding 

(9.8% decrease from 2021)28 

$22.3 billion in total angel investments 

(23.7% decrease from 2021)29 

Angel 

investment 

in 2022 

$356,650 average angel funding round 

(15.4% decrease from 2021)30 

17.7 deals on average per angel group 

(up from 17.1 in 2021)31 

21% of seed capital came from angel investments 

(compared to 32% in 2021)32 

3.4 jobs are created per angel investment

 (down from 4.4 jobs per deal in 2021)33 

1 in 4 chance of an entrepreneur securing an angel investment 

(in 2022, the yield rate increased to 26.7% from 24.1% in 2021)34 

First time CEOs constituted 73% of leaders funded by angel deals 

(up from 70% in 2021)35 

83% of angel deals and investments are in seed (63%) and 

Series A (20%) rounds36 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 8 
What were the top industries supported by angel investments in 2022?37 

Software 

16% 

Industrial/ 

Energy-Clean 

Biotech Tech FinTech 

9.3% 9.1% 7% 

Angel investors are allocating a lower portion of their investments within 

their region than in 2022, shifting more funding outside their region.38 

Healthcare Services/ 

Medical Devices 

24% 

Retail 

17% 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 9 
 

What is happening with seed fundraising? 

A pre-seed or seed round is typically a company’s first funding round.39 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.40 Businesses in an angel or seed round are the furthest from the public 

market, which insulates from many macroeconomic challenges experienced in later stages.41 

Seed activity has slowed in both overall deal value and count from its peak in 

the first half of 2022, echoing trends seen throughout the venture life cycle.42 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Since 2021, pre-seed fundraising has remained competitive for founders 

as the investor-friendly climate has grown more entrenched.44 

Founders 

16% 

Investors 

11.5% 

 

 

 

 

 

 

 

 

 

 

 

 

Early-stage businesses successful in raising pre-seed and seed funding are 

at different stages of product readiness.43 

 

 

 

Less time engaging More pitch decks 

with pitch decks sent per week 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 10 
Many early-stage investors seek equity – the amount of equity dilution to 

founders varies in pre-seed, seed, and Series A rounds. 

When investors take an ownership interest in a company, it dilutes or reduces the portion that 

founders own, so this funding is often called dilutive capital. In addition, with a funding round 

companies often reserve some equity for employee compensation.45 

Median equity dilution 

Preseed 

19.9% 

Seed 

18.6% 

Series A 

14.6% 12.6% Other Equity 

34.0% 

Employee Equity Reserve 

Average equity dilution

in an angel deal was 

9.3% in 2022 

(down from 13.6% in 2021).46 

Fundraising timeframes can be highly variable; the average fundraising 

time fell in 2021 but has risen since.47 

Average number of weeks to fund pre-seed and seed rounds 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

 

While seed activity has slowed, when seed rounds have closed, the deal 

values of those rounds have continued to rise. 

Distribution of deals by size48 Average and median seed deal values49 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 11 
Seed businesses face an uphill battle moving from a successful seed 

round to Series A.50 

The median time after a seed stage ofering 

before raising a Series A has increased. 

2014 2023 

14 months 25 months 

Many seed investors are expanding their geographic reach. 

Median distance between company and 

 lead investor in a seed deal (miles)51 

 

 

 

 

 

 

 

While the median distance between lead investor 

and company has increased, distance continues 

to be an added barrier that companies in small

markets, and in markets far from venture 

hubs, face when they need to raise capital.52 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 12 
 

Micro fund closings fall below pre-pandemic levels.53 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

 

 

A micro fund is a fund that raises $50 million What is a or less. In recent years, micro funds have 

strengthened seed funding.

54 micro fund? A majority of

micro funds are raised by emerging managers.

55 

“

Micro funds mainly raise capital from family ofces and wealthy 

individuals, such as GPs in VC funds and successful startup founders. 

Because of this, their LP base tends to be more fckle than that of larger 

frms, which is more geared towards institutional capital. 

MARINA TEMKIN, PITCHBOOK56 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 13 
What regulatory pathways are 

companies and pooled funds 

using to raise capital?57 

These oferings 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.59 

Rule 504 

Limited Oferings 

$258M 

($250,000 median) 

These oferings are sometimes called a "mini-IPO" 

and allow eligible companies to raise up to $20 

million in a 12-month period in a Tier 1 ofering and 

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

2 ofering through a process similar to, but less 

expensive than, a registered ofering.65 

Regulation A 

$1.5B 

($1.6M median) 

Regulation Crowdfunding oferings allow 

eligible companies to raise up to $5 million 

in capital in a 12-month period from investors 

online via a registered funding portal.62 

Crowdfunding 

$352M 

($100,000 median) 

These oferings allow companies 

and pooled funds 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.61 

Rule 506(b) 

Private Placements 

$2.7T 

($1.2M median) 

Other exempt oferings includes estimated amounts 

raised under Regulation S (ofshore oferings) and 

Rule 144A (following a private placement by a 

company, purchasers may use this exemption ro resell 

their securities to qualifed institutional buyers).63 

Other Exempt 

Oferings 

$1.3T 

These oferings allow companies and 

pooled funds to raise unlimited capital 

by broadly soliciting investors who 

meet certain wealth thresholds or have 

certain professional credentials.58 

Rule 506(c) General 

Solicitation Oferings 

$169B 

($750,000 median) 

Flows into 

Registered Funds 

$8.8T 

Flows into registered funds (companies 

registered under the Investment 

Company Act) refects the estimated 

amount of capital invested in registered 

open-end mutual funds, exchange-traded 

funds, and money market funds.60 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

Initial Public 

Offerings 

$17B 

($17M median) 

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.64 

Other Registered Oferings 

$1.1T 

($300M median) 

These oferings allow companies to 

raise unlimited capital and selling 

shareholders to obtain liquidity through 

public oferings using a registration 

statement fled with the SEC.66 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

15 
 

How are U.S. companies (excluding pooled funds) raising capital 

from investors?67 

What pathways are U.S. public U.S. public companies are 

and private companies using raising more capital than 

to raise capital? U.S. private companies. 

Rule 506(b) 

$266B 

Other Exempt 

Offerings 

$548B 

Registered 

Offerings 

$874B 

Only $4.6 billion of this amount was

raised by

small public

companies

in registered 

equity offerings.

U.S. public 

companies raised 

$1.0 trillion 

or 

61% of the capital 

raised by U.S. companies. 

U.S. private 

companies raised 

$662 billion 

39% of the capital 

raised by U.S. companies. 

 

or 

Rule 506(c) $16B 

Regulation A $1.4B 

Regulation 

Crowdfunding $0.4B 

Rule 504 $0.2B 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

 

 

 

 

 

 ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 16 
How are different industries using the top 3 offerings pathways 

to raise capital (excluding pooled funds)?68 

What is happening with Regulation Crowdfunding offerings? 

Crowdfunding has continued to support many diverse companies across the U.S. through small 

checks from many different investors.69 

$506.7M 

in 2022 capital 

commitments, 

down 10.2% 

from 2021 

$1,578 

average investor 

check size 

$428,486 

average raise in 

2022, down 5.9% 

from 2021 

71.5% 

of oferings in 

2022 exceeded 

minimum funding 

targets 28.5% 

of oferings in 

Q3 2022 had at 

least one woman 

founder 

70% 

of capital is 

distributed 

outside the 

top 10 capital 

hubs 

25.2% 

of oferings in Q3 

2022 had at least 

one founder 

of color 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 17 
The number of U.S. counties with crowdfunded companies has continued 

to increase, with new offerings not far from the 2021 and 2022 peaks. 

U.S. Counties with New Crowdfunding Oferings71 

Crowdfunded Companies70 

2022 

273 Counties 

2021 

220 

Counties 

2020 

137 

Counties 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Where are companies using Regulation Crowdfunding to raise capital? 

The shading of each state shows the estimated total capital raised, and the number indicates the total 

number of offerings in that state.72 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 18 
 

What is happening with Regulation D Offerings? 

Pooled Funds account for the majority of funds raised under Regulation D.73 

 

 

 

Operating companies

only offered 

12% of the value

of all Regulation D

offerings but make up

55% of the number

of offerings 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Where are companies using Regulation D to raise capital? 

The shading of each state shows the estimated total capital raised, and the number indicates the total 

number of offerings in that state.74 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 19 
What is happening in Regulation A offerings? 

The overall amounts sought have declined since the peak in the second 

half of 2021, while the number of offerings has remained steadier.75 

 

 

 

 

 

How much are issuers 

seeking to raise? 

$10 million (median) 

$20 million (average) 

Legal fees to conduct 

the offering: 

$25,000 (median) 

$55,000 (average)76 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Where are companies using Regulation A to raise capital? 

The shading of each state shows the estimated total capital raised, and the number indicates the total 

number of offerings in that state.77 

 

Over 80% of offerings 

continue to seek to raise 

$50M or less 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 20 
GU 

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. 

While VC activity is still concentrated in a few states, VC funds 

are investing in growth startups across the U.S. 

The below map illustrates the concentration of estimated VC deal value in 2022, with the number of 

VC deals indicated on each state.78 

0 

The top 3 states

accounted for

63% of the VC deal

value in 2022 – a

12% decrease

from 2020.

79

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 21 
The distance between VCs and their portfolio companies continues to increase.80 

Median distance (miles) between lead/sole U.S. investor 

and U.S. target company by funding round 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

 

What is the typical VC fund cycle?81 

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 2022 

was $40 million (down from $50 

million in 2021).82 A fund’s closing 

is the time when investors – often 

called limited partners – commit 

to an investment in the fund. 

VCs tend to invest in earlystage, high-growth companies.83 

Early-stage deals accounted 

for 70% of VC deals in 2022, 

but, given the prevalence of 

follow-on rounds, only 39% of 

VC investments.

Company Growth 

Many VC investors are actively 

engaged with the companies in which 

they invest – also called portfolio 

companies. The majority of portfolio 

companies are in contact with a VC 

investor at least once a week.

Exit 

Re-investment 

The fund ends when proceeds 

from all investments have been 

distributed to fund investors. 

Many investors reinvest in new 

funds. In 2022, the average 

time between fundraises was 

1.8 years—a decade low—and 

was only 1.6 years for general 

Investment 

84 

85 

partners of billion-dollar funds.87 

The life span of a VC fund 

is typically 10 years. VCs 

typically retain 20% of 

proceeds, while returning 80% 

to the fund’s limited partners.86 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 22 
Beyond capital, how can a VC investment benefit a portfolio company? 

Portfolio companies may receive:88 

Strategic 87% Marketing 69% Operational 65% Board 58% 

Guidance Introductions Guidance Management Guidance 

Personal 46% 

Many VC investments are accompanied by a board seat for a VC investor.89 For a portfolio company, 

having VC directors with investments within the same industry is associated with:90 

A higher probability of A higher probability of 

additional investment an IPO at 

(raising 1.14 additional rounds) a higher valuation 

(3.7 percentage point increase 

A decreased 

probability of failure 

(12.5 percentage point 

decrease) 

in IPO probability) 

Conversely, after losing a VC director:91 

A startup is A lower probability 

17% less likely to raise of an IPO and an 

another round and takes 18-month delay to 

4 months longer to close reach a successful exit 

A higher probability 

of failure 

(increase of 6.7 

percentage points 

over the next 3 years) 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 23 
How is VC investment activity changing? 

Following historically high investment activity in 2021 and the first half of 2022, deal counts and 

investment volume have fallen closer to pre-2021 figures.92 

 

 

 

 

 

 

 

 

 

 

 

Deal volume and count for early-stage and later-stage deals continued 

to decline from 2021 peaks.93 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

While the size of seed rounds has continued to increase, the size of 

Series A, B, C, and D rounds has fallen from 2021 peaks.94 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 24 
The need for capital in early-stage and later-stage VC deals exceeds the 

available supply.95 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For companies that are closing VC rounds, how have market trends 

affected those deals? 

Down round:

a round with a

lower valuation

than the prior round

In the second quarter of 2023, 

19%of deals were down rounds

(compared to 9% and 7% of deals in the second 

quarter of 2022 and 2021, respectively).96 

Time between rounds is climbing. After a seed round, the months between rounds average:97 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 25 
 

 

 

 

 

 

 

 

60.9% of this dry powder is 

concentrated in mega-funds – 

funds with $500M or more in 

commitments.103 

How is VC fundraising activity changing? 

VC fundraising slowed from the record highs of 2021 and 2022 and is on 

pace to set a 6-year low.98 

The frst half of 2023 saw a 73% decrease The amounts raised by VC funds 

in capital raised and a 44% decrease in varied across fund size.100 

the number of funds, each as compared to 

the frst half of 2022.99 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the past five years, the amount of capital that VCs have ready to 

invest - often called "dry powder" - has continued to increase.101 

While investments have slowed, record levels of dry powder could provide some insulation from the 

overall market volatility.102 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 26 
 

Fundraising continued to concentrate in large and established funds 

with the percentage of capital invested in emerging managers dropping 

to a new decade low.104 

For most of the past decade, the number of emerging firms has outpaced established firms by 

more than 2-to-1. In 2022 and 2023, the number of emerging firms is roughly on par with 

established firms.105 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“

While there may be [an] appetite to invest with 

emerging managers, that's probably going to be the 

hardest area to raise capital, simply because people 

91% are having to make some very difcult choices and 

are prioritizing re-ups with proven managers who of emerging 

managers found have long track records, in lieu of new relationships. 

fundraising difficult 

FIONA ANDERSON WHEELER, BC PARTNERS107 or very difficult106 

What drives LPs to allocate funds to emerging managers?108 

Niche strategy options 

Attractive return potential 

Desire to access new talent 

Added portfolio diversifcation 

More likely to negotiate better fees 

29% 

28% 

22% 

16% 

5% 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 27 
Over the last decade, emerging managers have increasingly raised funds 

outside of the traditional venture hubs.109 

 

63.7% 

of the capital raised since 2018 by 

firms headquartered outside of 

major markets has been by 

emerging managers.

110 

 

“

Local capital is imperative to help scout and fund startups that launch 

outside of traditional capital hubs. A declining presence of emergingmanager-led funds could make it more difcult for startups to raise 

capital and may force them into larger ecosystems. 

MAX NAVAS, PITCHBOOK111 

How have nontraditional VC investors impacted fundraising?112 

Although nontraditional VC investors—generally firms and institutions not called VCs—have assumed 

increased prominence over the past several years, their involvement in VC deals decreased year-over-year 

in 2022.113 

Despite their decreased participation, nontraditional VC investors still 

participated in deals that accounted for about 75% of the total VC deal value.114 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

 

 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 28 
There was a marked reduction in portfolio company exits in 

2022 compared to previous years. 

A reduction in exit activity reduces distributions from VC funds to their limited partners—in turn 

stemming reinvestments by those limited partners into VC funds.115 

U.S. VC exit value declined While exit numbers have declined 

90% year-over-year in 2022.116 dramatically since 2021, the overall exit 

ratios by funding stage have generally 

 remained consistent.117 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In the first half of 2023, 

acquisitions 

have generated the 

majority of exit value 

and have continued to account for about 

 

 

72% 

of the overall exit volume.118 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 29 
 

Initial Public Oferings and 

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 earlier-stage 

investors and employees. 

What is happening with IPO activity? 

The volume and number of initial public offerings has fallen significantly 

since its peak in the first half of 2021.119 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What are the top industries raising capital in IPOs (excluding pooled funds)?120 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 30 
In 2022, the number of exchange-listed IPOs dropped to its lowest point 

since 2009.

122 

While the median age of an IPO issuer has generally become younger over time, since 2010, it has 

hovered between 8 and 12 years. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How are the dynamics changing for companies going public? 

IPOs by U.S. small companies, when compared to the fluctuations in IPOs 

by large companies and SPAC offerings, have been relatively stable.121 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

| 31 
While the percentage of IPO companies with VC-backing has varied, the 

link between VC-backing and preparation for an IPO remains.123 

2015 

65% 

2020 

68% 

2010 

44% 

2005 

2000 

64% 

Since 2000, VC-backed

companies accounted for

54% of all IPOs and 70% of

technology IPOs.

124 

2022 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 37% 

Introduction 28% 

Small and Emerging Businesses 

and Exempt Offering Data 

How does being VC-backed affect a company’s IPO chances?125 

The success of an IPO depends on many factors, including the quality and performance of the 

startup, the underwriting services of investment banks, and general market factors. For many IPOs, 

underwriters play a crucial role in the pricing, marketing, and distribution of IPOs.126 

IPOs by VC-backed VC firms with VC firms that VC funds near 

portfolio companies more underwriting lose underwriter the end of their 

attracted 11.7% more relationships are relationships lifespan had an even 

attention in the more likely to experience a 22.3% greater decrease 

week of the offering take their portfolio decrease in the rate in their portfolio 

than non-VC backed companies public.128 of portfolio company company IPO rate 

IPOs.127 IPOs over the next 5 after the loss of an 

years.129 underwriter.130 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 32 
How has the U.S. public market changed over time? 

While the number of exchange-listed companies has declined, 

small exchange-listed companies account for the vast majority of 

that decline.131 

 

When taking into consideration mergers within and into the 

public markets, the listing gap is much smaller. The increased 

rate of mergers after 1997 accounted for about 2,500 fewer 

public companies (1,000 in public-public mergers and 1,500 

in public company acquisitions of private companies).132 

“

[R]egulatory cost itself is unlikely to explain the full magnitude of IPO

declines in the U.S. over the past two decades. Non-regulatory factors, 

such as decline in business dynamism, shifting investment to intangibles, 

abundant private equity fnancing, changing economies of scale and scope, 

and changing acquisition behavior are likely to play a more important role. 

MICHAEL EWENS, ET AL.133 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 33 
How has the public market fared based on other measures of size? 

The aggregate market Public companies’ market Public companies’ profits 

capitalization of all public capitalization was more were 8.3% of GDP in 2021 

companies has grown exponentially than 2X GDP in 2021 – nearly double

to $43.6 trillion as of June 2023 (compared to less than the proportion of

(from $1.7 trillion in 1983).134 

The portion of aggregate public company market capitalization 

represented by small exchange-listed companies, however, has 

declined by half each of the past four decades. From 1983 

to the first half of 2023, it has fallen to 0.3% from over 13%.

137 

half of GDP in 1990).135 profits to GDP in 1996.

136 

Where are registered offerings – often called public offerings – being 

used to raise capital? 

The shading of each state shows the estimated total capital raised, and the number indicates the total 

number of offerings in that state.138 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 34 
2,696 

 

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 many registered companies are small public companies?139 

Small Public 

Companies 

"Public companies,” often referred

to as reporting companies, are 

subject to reporting requirements

and must file certain reports,

including annual, quarterly, and

current reports, with the SEC on

an ongoing basis.140 

Top Industries of Small Public Companies 

Based on Number of Companies 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 35 

Large Public 

Companies 

2,989 
How are small public companies faring after exchange-listed IPOs? 

Companies may seek to go public for many reasons, but each company should consider the potential 

benefits and costs. 

In 2022, out of 91 small cap companies that conducted an IPO 

and listed their shares on certain exchanges for small cap stocks:141 

A reverse stock split reduces the number of a 

company’s outstanding shares, while the aggregate 

value of the shares remains the same. It can be 

viewed as a signal of a company in distress.142 

What is a 

reverse 

stock split? 

had a negative rate 

of return from their 

IPO price, with an 

average return of -65% 

92% 

appeared on an 

exchange non-compliance 

list after their IPO 

34% 51% 

completed 

reverse 

stock splits before 

or after their IPO 

How are small public companies affected by instability in the 

financial system?143 

Commercial banking and financial system stability is very important to small public companies. 

Losing a major creditor is more likely to cause more severe damage 

to small public company borrowers than their larger counterparts. 

Small public company borrowers are likely to suffer a heightened 

negative reaction following a bank failure and experience more 

negative returns longer term. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 36 
 

Despite the drop in the average offering size last year, the aggregate amount 

raised in registered equity offerings across the top industries by U.S. small 

public companies remained in line with the prior 12-month period.146 

 

 

Raising capital is

a primary

objective for

23% of

small public

companies.145 

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

registered equity offerings?144 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 37 
Costs of being public 

The costs associated with going public often garner much attention. However, the costs to operate 

as a public company may be even higher. CFOs estimated the average percentage of their total 

recurring incremental costs of being a public company.147 

32% 22% 18% 16% 12%

Incremental 

Audit 

Total compliance

costs for a median

public company 

vary from 2.1% to

6.3% of market capitalization.

148 

Public/ Financial Legal Regulatory 

Investor Relations, Reporting Compliance 

Human Resources, 

Information Technology 

Small public companies and new public companies face high regulatory costs as a percentage 

of their size and profit. The regulatory costs for small public companies are disproportionate 

relative to their size because many costs are fixed.149 

Small public companies place greater importance on increasing research 

coverage than large or mega-cap public companies.150 

The average number of analysts 

covering a mega-cap public 

company is more than 

4x higher 

than at small public companies.151 

Small public companies prioritize targeting new investors.152 

identify targeting new investors as a top priority 

46% 

80% 

focus on enhancing engagement with current shareholders 

39% prioritize increasing international share ownership 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 38 
Women Founders 

and Investors 

Women-Owned Business Formation and Ownership 

While the portion of businesses owned by women decreases as the 

businesses mature, their survival rate outperforms the average small business. 

of non-employer small 

businesses are women-owned 

or equally women-and menowned, representing 

11.5 million firms.153 

44.6% 

of employer small 

businesses are women-owned 

or equally women-and menowned, representing 

2.1 million businesses.

154 

36.9% 25.0% 

of VC deals in 2022 

were with women-founded 

or co-founded companies, 

representing 4,372 deals and 

accounted for only 17.6% of 

all venture funding.

155 

 

 

 

 

 

 

 

 

 

 

 

 

 

The two-year survival rate for women-owned 

employer businesses is 81%, besting the average

small employer business survival rate of 79%.156 

By share of employer firms, women owners remain underrepresented across 

demographic groups.157 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 39 
 

Women are drawn to entrepreneurship, but many women founders feel their 

gender is holding them back.158 

78% of women In 2020, on average 

perceived 1,821 new businesses 

entrepreneurship as a were started daily. 

good career choice in Of those, 64% were 

2022 (up from 64% started by 

34% of women 

founders reported 

burnout (compared 

to 20% of men 

founders).161 

70% of female 

founders felt their 

gender has held 

them back (up from 

55% in 2019).162 

in 2016).159 women of color.160 

As women advance in their career, they are increasingly disproportionately 

shouldering domestic responsibilities.163 

Percentage of men and women in each role doing the 

most household work and childcare in their family 

 

 

 

 

 

 

 

 

 

 

 

Women founders turn to each other for support. 

More than ever, women founders seek a 

sense of community and connections with others

who share their struggles and successes.164 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 40 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
Capital-Raising Trends for Women-Owned Businesses 

Women business owners are more likely than men to seek financing to meet a 

critical operating need, while less likely to seek financing to grow or pursue a 

new opportunity.165 

62.3% of women sought financing to meet 

operating expenses (compared to 54.6% of men). 

18.4% of women sought financing to replace or 

repair assets (compared to 23.6% of men). 

Why seek 

financing? 

26.3% of women sought financing to 

expand, acquire assets, or pursue new 

opportunities (compared to 32.6% of men). 

A woman’s confidence, compensation, and feelings of support are all drivers in 

meeting growth targets that can determine access to financing.166 

Confidence and feeling Paying yourself as a The percentage of a woman 

supported are positive factors founder in the first year can founder’s household income 

in achieving cash flow have a positive impact on coming from her business can 

break-even. cash flow break-even. have a positive impact on 

average monthly revenue. 

2022 was a strong year for women entrepreneurs seeking angel capital.167 

Women constituted Angel investors invested in 

37.1% 25.6% 

of entrepreneurs seeking angel capital of those investment opportunities brought 

in 2022 (up from 28.6% in 2021).168 to their attention (up from 19.7% in 2021, 

and mirroring the overall market increase 

from 24.1% in 2021 to 26.7% in 2022).169 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 41 
As VC funding contracted, the share of funding to women founders remains 

a fraction of the overall capital raised.170 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Further, only 

Only 2% of all 5% of that

venture funding slice of the pie 

raised in 2022 was for all women 

invested in startups founders went to 

led by all women Latina and Black 

founders.171 

women founders.

172 

In 2022, both women-led and mixed founder teams received a declining 

percentage of overall deal value in each progressive funding round.173 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 42 
All-women teams faced strong headwinds raising capital.174 

Similar to 2021, However, all-women 

all-women teams continued teams raised less per 

to have more investor meeting ($14,300) than 

meetings in 2022 than all-men ($25,000) or 

all-men or mixed teams.175 mixed ($27,900) teams.176 

All-women teams with diverse members had a 51% decrease 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

in investor meetings (33% fewer meetings than their peers) 

and continued to be the only demographic to raise on average Introduction 

less than $1 million per raise.

177 

Small and Emerging Businesses 

and Exempt Offering Data 

On average, VCs spent 125% more time on all-women team slides and scrutinized different Mature and Later-Stage Businesses sections depending on the gender of the team members.178 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

All-Women Teams Most 

Scrutinized Slides 

All-Men Teams Most 

Scrutinized Slides 

Team Slide 

Business Model 

Business Traction 

Product Slide 

Business Model 

Company Purpose 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 43 
Women-founded companies continue to exit and return capital to 

investors faster than the overall market.179 

Median Time (Years) to Exit 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

 Small and Emerging Businesses 

and Exempt Offering Data 

 

 

 

 

 

 

 

 

 

 

 

Despite market headwinds, women founders do more with less. 

As time between VC rounds increased and raising equity became more challenging, managing cash 

and burn rate became critical.180 

Women-founded companies use 25% less capital per month

than men founders, extending their runways and demonstrating resiliency and 

resourcefulness amidst challenging economic conditions.181 

“

Women bring fresh insights and new strategies to solving problems, 

which the world needs more than ever. From climate change and 

social and economic inequity to the digitization of industry, there are 

an infnite number of complex challenges to address with innovative 

solutions and services. 

ARTI RAMAN, TITANIAM182 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 44 

7.2 7.2

7.0 7.0

8.1

7.8 7.7

7.4

7.2

2018 2019 2020 2021 2022*

*As of June 30, 2022

7.2

All VC-backed 

Companies

Women-founded 

Companies

7.2

6.7

7.0 7.0

8.1

7.8 7.7

7.4

7.2

Median Time (Years) to Exit
Women in Leadership Roles 

Women remain dramatically underrepresented in corporate leadership 

roles.183 

Women accounted for nearly half of However, women’s representation in the 

all entry level positions. C-suite was half that amount. 

Only 1 in 4 

C-suite 

executives in 

2022 was 

a woman. 

Women of color accounted for However, only 1 in 20 C-suite

1 in 5 entry level positions. executives was a woman of color. 

Women are similarly underrepresented as founders in VC-backed 

companies.184 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nearly half of

all VC-backed

founders are

White men.

 

Only 1 in 5 founders in VC-backed companies is a woman.

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 45 
While women remain underrepresented in board roles at VC-backed 

companies, the number of boards with at least one woman has increased 

in recent years.185 

 

4% 

of all directors are 

women of color 

and 

76% 

of company boards 

do not include a single 

woman of color.

186 

 

 

 

 

 

 

 

 

 

 

 

 

For the first time, women average Men continue to hold: 

1 board seat per private-company board 

(while men average 6 seats). 

“One woman can

make a difference.”

– SHARON BOWEN,

CHAIR, NYSE187 

88% of investor-director 

board seats and 

91% of executive 

director seats. 

Many of these gains are driven by The lack of diversity among investors 

independent director seats. Women are and the entrepreneurs they back shapes 

most likely to occupy an independent the demographics and network of the 

director seat (53%) than an investor-director boardroom.

189 

or executive director seat.188 

Private companies with gender diverse boards raise more capital and are 

more likely to conduct an IPO.190 

Gender diverse boards 

were raised an average of 10x more likely 16% more funding to have gone public. ($302 million), and 

Contents

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 46 
Women represent only a fraction of the C-suite of small public companies; 

however women-led companies have more diverse boards than those led 

by men. 

Women CEOs make Companies led by 

up 6.4% of all CEOs women CEOs have more 

in the Russell 3000 gender-balanced boards 

(rising to 192 in 2023, (35%) than those led by 

from 163 in 2020).191 men (6%).192 

“

[W]hen women join the C-suite, they catalyze a shift in corporate thinking

that may support new longer-term, internally cultivated value-creation 

strategies. For example, management teams become more likely to focus 

on R&D versus M&A and more open to change, yet less open to risk. 

JACKIE COOK, MORNING STAR.193 

While more women now hold board seats at small public companies 

than they have historically, gender parity remains rare, and progress 

has slowed.194 

55% 

of Russell 3000 

company boards are 

gender-balanced 

or have 3 or more 

women on boards. 

Women held 

29% 

of the Russell 3000 

board seats 

(up only 

1% from 2022). 

In 2023, 

37% 

of new directors 

were women

 (down from 

40% in 2022). 

Only 7% of Russell 3000 

board seats are held by 

women of color. 

Only 12% of 

boards achieved 

gender parity. 

 

 

Contents

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 47 

60% of the seats 

gained by women were 

added to the board – 

not replacing a man. 

60% of the seats

gained by women were

added to the board –

not replacing a man.

Only 7% of Russell 3000

board seats are held by

women of color.
 

39.5%of angel investors in 2022 were

women (an increase from 33.6% in 2021).195 

Women investors lead on values-based investing.196 

Trends in Women Investors in Small Businesses 

As a percentage of active investors, women angel investors reached a new 

record high in 2022. 

51% of women invest 45% of women invest

in startups aligned with in startups to make the 

their values world a better place 

(compared to 39% of men). (compared with 23% of men). 

Although gender diversity continues to improve in the VC industry, women 

remain significantly underrepresented at senior levels.197 

 

“

[There remains] a huge imbalance in terms of who's managing the capital . . .

[which amounts to] a hugely inefcient market opportunity . . . [A]t the end of 

the day we need allocators to actually allocate their capital to diverse managers. 

CHRISSIE CHEN PARISO, MPOWERED CAPITAL198 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 48 

 

 

 

 

 

 

 

 
Women constitute a distinct minority of investors with senior decisionmaking powers and control a fraction of total VC dollars.199 

of firms’ investment 

committees are women 

(down from 21% 

in 2020). 

20% 

of investment firm 

owners are women 

(down from 18% 

in 2020). 

17% 

of deals were 

originated by women 

(up from 24% 

in 2020). 

25% 

Despite hurdles, women-owned VC firms are growing. 

150 22% 

investment firms were of investment partners at firms founded within 

women-owned in 2022 the last 10 years were women (up from 17% at 

(a 29% increase over 2021).200 firms founded over 10 years ago).201 

Women-owned firms often raise smaller funds and have a harder time raising capital from 

institutional investors than their male counterparts.202 These challenges are even more acute for 

African American/Black and Hispanic/Latina fund managers.203 

Women-owned frms by race and ethnicity 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

while 64%of White women

were raising a successor fund.

204 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 49 
 

Diverse Founders 

and Investors 

D

iversity205 is the representation of various elements of identity, including race, ethnicity, 

nationality, gender identity, LGBTQ+ status, socioeconomic status, ability, religion, and age. 

Diversity often refers to the degree to which specific groups are represented in the workforce 

and leadership.206 

Business Formation and Ownership Trends 

The proportion of diverse business owners is growing.207 

2022 had the highest proportion of new business formation by founders of color.208 

 

 

 

 

 

 

People of color are increasingly creating new businesses, but need more 

support as those businesses grow and become more established. 

Over the last 10 years, diverse businesses accounted for over 

50% 209 of new businesses and created 4.7 million jobs. 

The top motivators for entrepreneurs of color include 

the desire to be their own boss (30%), dissatisfaction with 

corporate America (20%), and pursuit of passion (13%).210 

African American/Black and Hispanic/Latino adults 

intend to create new businesses at over 2.5X and 

2X the rate of White adults, respectively.211 

The rate of Hispanic/Latino adults starting or running 

a new business increased by about 10 percentage

points (from 17% in 2021 to 27% in 2022).212 

White adults continue to own established businesses at a higher 

rate than African American/Black and Hispanic/Latino adults.213 

 

 

 

 

 

Diverse 

Business 

Formation and 

Growth 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 50 
 

 

 

 

 

People of color are more represented among young founders than 

among older founders.214 

 

 

 

 

 

 

 

 

 

 

Founders of color

represented 49%

of all 21-30 year-old founders and only

17% of all 61-80

year-old founders.

 

The COVID-19 pandemic has a lasting impact on diverse business owners. 

Business Earnings Losses During the 

COVID-19 Pandemic by Race and Ethnicity216 

COVID-19 negatively affected 

earnings of many small businesses, 

however, losses were 

disproportionately felt by 

diverse business owners 215. 

 

“

The COVID-19 pandemic has impacted the ability of entrepreneurs to 

access the capital that they need to sustain (or grow) their businesses, 

especially among Black entrepreneurs, with the share of business 

whose fnancing needs are met declining. 

EWING MARION KAUFFMAN FOUNDATION217 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 51 
Precursors to Accessing Capital 

Discrepancies in wealth and income across demographic groups affect 

the financial starting line for many entrepreneurs of color.218 

Many founders rely on funds from personal savings, friends, or family to start their business.219 The 

nation’s significant wealth inequality across racial groups particularly affects African American/Black 

and Hispanic/Latino entrepreneurs’ ability to tap personal assets as a funding source.220 

 African American/Black

and Hispanic/Latino 

families had 24 cents

for every $1 of White

family wealth.221 

 

Disparities in income also affect the ability of entrepreneurs of color to grow personal wealth and 

savings and self-fund a business. 

Household Income Distribution, Median Household Income 

by Race and Ethnicity222 by Race and Ethnicity223 

 

 

 

 

 

 

 

 

Asian American 

$108,700 

White 

$81,060 

Hispanic/Latino 

$62,800 

African 

American/Black 

$52,860 

 

 Native American/ 

 Alaska Native 

 $52,810 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 52 
Limited access to traditional financial systems and lending also serves 

as a barrier to funding a new business. 

Over the last few years, while more diverse households have opened bank accounts, the overall 

unbanked rate has remained steady.224 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Despite progress, Hispanic/Latino and 

African American/Black households are 

3 to 5X more likely 

than White households to be 

unbanked.

 

 

Entrepreneurs of color Share of Funding Received by Small 

are less likely to receive all the Businesses by Race and Ethnicity225 

funding they seek from sources 

such as loans, lines of credit, 

and cash advances. 

 

 

 

 

 

 

 

 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 53 
Difficulty accessing capital can affect whether the business will seek 

capital for future needs.226 

Of those businesses, the percentage that did not apply because they expected 47% to be turned down varied by race and ethnicity: of businesses 

that needed 

capital did 

not apply. 

 

 

 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

 

Lack of access to professional support and capital is a barrier for all 

entrepreneurs, but the challenge is heightened for entrepreneurs of color.227 

35% 30% 29% 23% 22% 18% 

of Asian of African of Multiracial of Native of Hispanic/ of White 

American American/ American Latino 

Black 

entrepreneurs reported 

trouble finding professional support, 

advice, or role models in their network 

when starting and growing a business. 

A lack of access to financial resources is particularly problematic for 

some entrepreneurs of color.228 

44% of Native American 

42% of African American/Black 

41% of Hispanic/Latino 

35% of Asian American 

entrepreneurs cite a lack of access 32% of Multiracial to financial resources as the primary 

reason they stopped pursuing 31% of White starting their business. 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 54 
 

 

Capital-Raising Trends 

The number of entrepreneurs of color seeking angel capital continues an 

upward trend, but underrepresentation persists. 

Founders of color constituted Angel investors invested in 

15% 33.1% 

of entrepreneurs seeking angel capital of those investment opportunities 

in 2022 (an increase from 12.8% in 2021 brought to their attention 

and 5.3% in 2020).229 (a slight increase from 30.5% in 2021).230 

A majority of founders of color have seen increased interest from VCs.231 

of founders of color say they received increased 52% interest from VCs in 2021-2022.

of founders of color say they had an increase in 50% conversations with VCs in 2021-2022.

VC investors more heavily scrutinized particular sections of diverse 

teams’ pitch decks compared to decks of all-White teams. 

Teams with diversity experienced:232 

25% more time on the 28% more time 67% more time 55% more 

team sections. For all-White on the traction on the market time on competition 

teams, this was one of the section. size section. section. 

least important slides. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 55 
 

 

Diverse founding teams face outsized challenges in securing VC investment, 

and the amounts invested are lower.233 

Racially and ethnically diverse teams raised 

33% less 

on average in 2022 than all-white teams.234 

While it is difficult to get accurate race 

and ethnicity statistics on the overall 

market, data providers have started to 

provide insight on VC funding raised by 

founders of color. Within that data, a meager 

Within the first 5

years, African American/

Black-owned businesses raise

about 1/3 as much from 

venture capital funds as

other startups.235 

6%of VC investments were categorized as

“Diversity Investments” based on 

the gender, race, or ethnicity of the business’s 

leadership team. 

Hispanic/Latino 6.7% 

Asian American/Pacific Islander 5.2% 

African American/Black 3.7% 

In Q1 2023, the count of

deals with diverse founders

declined, reaching its 

lowest deal count since 2020.

237 

Of those investments, 

only 16% of funding

 went to racially and ethnically 

diverse founders (as identified 

or self-identified on the platform):236 

Middle Eastern/North African 0.1% 

Native American/Alaska Native 0.1% 

As VC funding dropped between 2021 and 2022, African American/Black- and Hispanic/Latinofounded startups saw a disproportionately larger decline in their share of investments.238 

Only 1.5% of VC dollars Only 1.1% of VC dollars was 

was invested in Hispanic invested in African American/ 

founders in 2022 Black founders in 2022 

(down from 2.5% in 2021).239 (down from 1.5% in 2021).240 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 56 
 

Diverse Founders in Leadership Roles 

African American/Black and Hispanic/Latino founders and executives 

remain underrepresented as compared to their share of the labor market.241 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors of color occupy 20% of seats on public company boards.242 

 

African American/Black

directors saw the highest

increase in directorships, a

rise of more than 90% 

between 2019 and 2023.243 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 57 
Diverse Investors and Allies 

Diversity increased among angel investors, although underrepresentation 

remains. 

8.6% of angel investors in 2022 were

racially or ethnically diverse (an increase 

from 4.1% in 2021 and 5.3% in 2020).244 

The percentage of persons of color has increased at VC funds but they 

remain particularly underrepresented at senior levels.245 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

 

and Exempt Offering Data 

 Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

 

Diverse professionals

employed at VCs 

accounted for 

39% of junior-level

professionals, but only

31% of investment 

professionals and

25% of investment

partners. 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

 COMMITTEE | Highlights 

 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

Persons of color are also underrepresented among limited partner 

investors in VC funds.246 

 

 

 

 

 

 

 

 

 

 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 58 
Most African American/Black and Hispanic/Latino investment partners 

are in firms that focus on seed and early stages.247 

 Seed and early-stage

investments often have

smaller check size.

248 

 

 

 

 

 

 

 

 

 

 

Investors of color are more likely to invest in businesses with diverse 

founders.249 

Women and people of color 

are the founding partners at 

74%of the active seed funds

whose investment criteria include founder 

diversity and are making 1⁄2 of their

investments in underrepresented founders.250 

“One factor in the success of

diverse investing teams may be

that they are more likely to invest

in underrepresented founders.” 

– VC HUMAN CAPITAL SURVEY251 

While more investors and VCs are focused on diversity, equity, and 

inclusion, the enthusiasm that rose in 2020 for investing in diversefounded companies has waned. 

More VC frms have had their investors More VC frms are focused on DEI at their 

(LPs) request the frm’s diversity, equity, and portfolio companies.253 

inclusion details:252 

36% 41% 47% 19% 30% 38% 

2018 2020 2022 2018 2020 2022 

However, some of the enthusiasm seen in 2020 to close the funding gap for founders of color has 

reverted to 2019 levels.254 

32%of firms identified finding opportunities with

diverse-founded companies as a top priority 

(down from 43% in 2020 and 33% in 2019).255 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 59 
 

 

 

 

LGBTQ+ founders report challenges raising capital. 

40% of LGBTQ+ business owners cite raising capital as 

their greatest business challenge.256 

93% of LGBTQ+ business owners note that 

access to capital is limiting their growth potential.257 

Access 

to Capital 

for LGBTQ+ 

Founders 

LGBTQ+ founders are more likely to use cash 

reserves (61%) and personal funds (59%) than 

non-LGBTQ+ founders (52% and 53%, respectively).258 

Only 20% of LGBTQ+ founders that applied for 

business loans were approved (compared to 50% 

of non-LGBTQ+ businesses).259 

11% of LGBTQ+ and 17% of LGBTQ+ founders of color 

report experiencing anti-LGBTQ+ discrimination in banking 

or financial services.

260 

LGBTQ+ founders are raising less funding than non-LGBTQ+ founders, 

but creating more jobs, patents, and exits. 

7.1% 8% 0.5% 16% 

of the U.S. of LGBTQ+ founders of venture capital less funding is raised 

population identify sought equity was raised by by LGBTQ+ founders 

as LGBTQ+.261 investments, which LGBTQ+ founders.263 as compared to the 

is in line with the average founder.264 

average founder.262 

LGBTQ+ founders create: 

36% more 114% more 44% more

265 jobs patents exits. 

Many investors want opportunities to invest in LGBTQ+ equity and inclusion.266 

45% 

of all U.S. 

investors 

86% 

of LGBTQ+ 

investors 

76% of 

investors with 

an LGBTQ+ 

household 

member 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 60 
 

Founders with disabilities often start businesses out of necessity.267 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Founders with disabilities face challenges accessing capital.271 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

13.4% 

of the US population 

has a disability 

(roughly 44 million).268 

9.5% 

of workers with a disability 

are self-employed vs 6.1% of 

those with no disability.269 

6.3% 

of small businesses, or 

2.1 million 

small businesses, are 

owned by a person with 

a disability.270 

Diverse Founders and Investors 

10% of adults with a 84% of disabled 61% of disabled 

disability are unbanked vs entrepreneurs note that entrepreneurs say they Natural Disaster Areas 5% of people who do not they do not have the same have to demonstrate 

have a disability.272 access to opportunities and superior knowledge to be 

resources as non-disabled taken seriously.274 Rural Communities 

entrepreneurs.273 

POLICY | Recommendations 

“

[As a disabled founder], it’s easier to build a satellite and send it to ADVOCACY | What We Do 

space than it is to raise money. 

ERIC275 COMMITTEE | Highlights 

ENDNOTES | All the Details Despite challenges accessing capital, entrepreneurs with disabilities have 

developed and launched innovative products and solutions. 

OFFICE | Meet the Team 

58%of founders with a disability used their

disability experience to develop and design 

products and services that others haven’t thought of.276 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 61 
5.2% 

Veteran founders report challenges raising capital. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of small business are veteran-owned 

(1.7 million businesses).277 

Veteran small business owners 

employ roughly 4 million people.

278 

Access to capital continues to be a barrier to veterans starting or 

growing a small business.279 

40% of veteran

entrepreneurs feel

that the capital they

need is not readily

available.280 

10%of veteran entrepreneurs sought an

equity investment.281 

Veterans remain underrepresented at VC firms. 

Only 3% of investment firm employees were 

veterans, the same percentage as in 2020 (compared to 

nearly 8% of the U.S. population).282 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 62 
Natural Disaster Areas 

How do natural disasters affect small businesses? 

OPEN 

CLOSED CLOSED 

1 in 4 

Nearly 2/3 of small employer firms owned by 

businesses in the Northeast people of color reported 

that had disaster-related experiencing disasterlosses were forced to close, related losses.

285 

at least temporarily.284 

Natural disasters affect communities and their small businesses across 

the country. 

Between October 1, 2022 and September 30, 2023, there were 29 natural disaster events with losses 

exceeding $1 billion.286 

14% 

of small businesses 

experienced natural disaster 

related losses 

(up from 12% in 2021).283 

 

Total estimated

natural disaster-related

losses in the U.S. exceeded

$109 billion.

287 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 63 
Capital from investors remains a small portion of funding for 

small businesses affected by natural disasters. 

Those affected by natural disasters use similar funding sources as all small and emerging businesses.288 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percent of small businesses 

that applied for external 

capital and sought 

equity financing289 

Firms that used external 

capital to cope with 

disaster losses290 

 

How does the percentage of the population affected by natural 

disasters compare to the share of capital from investors raised 

by affected businesses? 

Of the total U.S. capital raised from 

investors over the last 3 years 

49% 

of the U.S. population291 lives in an area that was 

affected by a natural disaster during the three 

46% of 

offerings 

46% of 

issuers 39% of 

capital 

supported a small business affected years ending June 30, 2023.292 

by a natural disaster.293 

Capital raised by small businesses in areas affected by natural disasters 

varied under different offering pathways.294 

 

Registered equity

offerings by small public companies

only accounted for 

7% of the capital raised

across all registered 

equity offerings over

this 3 year period. 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 64 
Rural Communities 

Small businesses are the economic backbone of rural communities, 

providing the majority of rural jobs. 

While 79% of rural small those businesses 

businesses each employ fewer than collectively account for 

295 10 employees, 

of employment in rural counties 

(compared to 45.5% in metropolitan counties).296 

Rural small businesses are located across the country, with the 

majority in the central U.S.297 

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. 

 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 65 

54% 
 

Access to capital remains critical to building and strengthening 

rural entrepreneurial ecosystems.298 

Small banks remain the most prominent financial services provider for 

rural small businesses.299 

 

 

 

Rural communities are 

10X 

more likely to be located 

in a banking desert.

300 

 

 

 

The percentage of rural businesses seeking capital from investors is 

increasing, but it remains a very small portion of funding. 

of rural small businesses Up from 4% 7% seeking external capital sought of rural small businesses equity financing seeking external capital in 2021 

(compared to 8% of urban (compared to 7% of urban 

small businesses).301 small businesses in 2021).302 

“

[T]he pandemic was very tough in many ways, but one of the benefts

—and a tail wind to rural—has been its entering mainstream acceptance 

for remote working. It's gotten a lot easier to do business development 

networking . . . [and] to understand from an investment thesis 

standpoint, how you can build a scalable, very meaningful business, 

even in a small town in the U.S. 

JAY BOCKHAUS, CORI INNOVATION FUND303 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 66 
How does the rural population compare to the share of capital 

from investors raised by rural small businesses? 

18% of the U.S. population 15% of small

employer firms are lives in rural areas.304 

located in rural areas.305 

Of the total U.S. capital raised from investors over the last 3 years 

3.6% 3.7% 1.6% 

of offerings of issuers of capital 

supported rural small businesses.306 

Small businesses in rural areas raised a notably smaller portion of overall capital relative to the rural 

share of population during the three years ending June 30, 2023.307 

 

ADVOCACY | What We Do 

 COMMITTEE | Highlights 

 

Registered equity

offerings by small

public companies

only accounted for 

7% of the capital raised

across all registered 

equity offerings over

this 3 year period. 

ENDNOTES | All the Details 

 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 67 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

Introduction 

Small and Emerging Businesses 

and Exempt Offering Data 

Mature and Later-Stage Businesses 

Initial Public Offerings and Small 

Public Companies 

Women Founders and Investors 

Diverse Founders and Investors 

Natural Disaster Areas 

Rural Communities 

POLICY | Recommendations 

OFFICE | Meet the Team 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 68 

POLICY

Recommendations 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
HELPING 

navigate securities laws 

and other Issues via 

education and policy 

recommendations 

B

ased on feedback we have received through our engagements with small businesses and their 

investors, the Office has developed the following policy recommendations for Congress and 

the Commission. We have distilled this feedback into five key areas for action to address the 

most significant issues raised about our capital-raising rules. 

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, a 

discussion of particular impacts 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 continue to work together to bring innovations 

to market. 

In June 2023, our Office joined

the U.S. Minority Business 

Development Agency’s first

annual Diverse Business Forum

on Capital Formation. Events like

these provide opportunities to 

gain perspectives from thought

leaders on the successes and 

challenges facing small business

and their investors. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 69 
Entrepreneurs and their investors need accessible tools and 

educational resources to navigate complex securities laws. 

Background Context 

Throughout the last fiscal year, we met with entrepreneurs and investors from across 

the country with diverse capital-raising experience. We heard from 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 for 

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

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

Others told us that they were in early exploratory stages and unsure how to start 

their funding journey or what options were available. 

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 understand 

what capital-raising pathways may be available to them. 

Demographic Impacts 

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

the complexity of our regulatory framework remains. Women and diverse 

entrepreneurs308 often lack access to the same networks, experienced mentors and 

advisors, or supportive entrepreneurial communities as their counterparts309 and 

therefore face an uneven playing field when navigating that complexity. 

Related Developments 

We have continued to partner with other SEC offices and divisions to expand and 

enhance the Capital Raising Hub, a centralized portal of educational resources for 

each phase of the capital-raising journey for small businesses and their investors. 

Since we launched the Capital Raising Hub in 2021, our resources have received 

over 255,000 views. We continue to add resources based on feedback we receive 

through our outreach efforts. 

For example, this year we added: 

§ 10 new topics to our Building Blocks suite of educational “one-pagers” that

break down into plain language securities law concepts, at all stages of the

lifecycle, and which collectively received nearly 400,000 views this year;

§ new Capital Raising 101 videos briefly walking through introductory topics;

§ a brand new Funding Roadmap that explores small business funding

options from self-funding to non-dilutive options like grants to loans to capital

from investors;

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 70 
§ additional terms to our popular Cutting through the Jargon glossary, which

seeks to demystify common terminology; and

§ a new educational video and chart to our Rulemaking Gallery providing

high-level summaries of the new Private Fund Adviser rules.

Proposed Solution 

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

businesses, investors, federal and state agencies, and other thought leaders in 

the market to expand, promote, and improve accessibility of our educational 

resources. We also will continue to seek feedback and welcome suggestions for 

future resources. 

We continue to receive calls to make these resources more accessible and for 

additional resource topics and formats. In order to be able to respond to these 

calls, we will need the Commission’s support of, and dedication of resources to, 

our efforts in this area. This support 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 and to access our capital 

markets effectively. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

In August 2023, our Offic

Nasdaq Entrepreneurial Center’s

e joined

“Capital Raising Readines

webinar to share our educational

s”

resources with early-stage

entrepreneurs seeking to raise

capital. The event was one

of many that highlighted the

challenges facing entrepreneurs.

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 71 
Exempt offering pathways are essential to small business 

capital raising. Targeted regulatory changes could improve 

their utility. 

Background Context 

Every operating company needs capital to build, grow, and scale. When that capital 

does not come from retained business earnings, personal savings, or debt financing, 

companies regularly look to the private markets to finance early-stage operations and 

development. Some founders do this with a single private financing in mind; others 

do so with aspirations of raising multiple rounds in preparation for becoming a 

public company. In both cases, raising capital through the private markets via exempt 

offerings is a necessary step in building the company. For companies that will one day 

go public, early-stage capital provides a foundation for the business to reach the size 

and maturity needed to go public. For the millions of small businesses that are not 

looking to become public companies, funding is critical for their development and for 

job creation in communities throughout the United States. 

As we engage with entrepreneurs, investors, entrepreneurial support organizations, 

and other thought leaders, many share details about what has been working well 

with respect to capital raising and areas where they face challenges. Overwhelmingly, 

companies and investors alike tell us that Regulation D works well for those companies 

that have access to accredited investors. In fact, as highlighted in this report, Regulation 

D is the most frequently used pathway to raise capital from investors.310 

However, many founders do not have pre-existing accredited investor networks.311 

Further, angel investments, a significant source of early-stage capital (especially for 

women and founders of color), have slowed over the past year,312 adding a further 

barrier to raising capital for those unable to self-fund or tap into wealthy networks. 

Targeted regulatory changes are needed to promote inclusivity and equity in the 

entrepreneurial ecosystem and improve the capital-raising process. 

Demographic Impacts 

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

companies founded by women and racially and ethnically diverse entrepreneurs.313 This 

is the case at all lifecycle stages, from startups through later-stage companies, leaving 

these businesses financially constrained and unable to reach their full potential.314 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 72 
 

Diversifying capital allocators and decision-makers facilitates greater funding of 

diverse founders. Data shows that investors of color are more likely to invest in 

diverse founders.315 Therefore, policies that have a disproportionate impact on 

diverse investors are likely to further impede investment in the next generation of 

diverse innovators working to grow their companies. 

For example, the accredited investor definition largely determines whether an 

individual is eligible to invest in many early-stage companies.316 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.317 Racial and ethnic 

diversity among angel investors increased in 2022, yet diverse founders are still 

significantly underrepresented.318 

Changes that would decrease the pool of accredited investors, including angel 

investors, would impact small business capital formation and especially for 

first-time founders and racially and ethnically diverse entrepreneurs. 

Due to our nation’s racial and ethnic wealth gap, founders of color are less likely 

to have sufficient personal wealth to finance their company by bootstrapping.319 

They are also less likely to have fulsome access to traditional financial systems and 

lending or to benefit from a robust personal network of accredited investors.320 

Yet many diverse founders have found funding opportunities through Regulation 

Crowdfunding, which enables a company to raise capital from their local 

community, brand or product loyalists, and other non-accredited investors.321 This 

pathway also has been particularly attractive to small businesses located outside of 

traditional capital hubs.322 

“

Angel investors, they play an important role, because they're bringing 

this access to capital. It's arguably more important for diverse founders, 

and why is that? Because . . . if Latinos are a refection of my family, 

we don't have the tios and tias—the aunts and uncles—that are going 

to fund me a couple hundred thousand, right? They don't have the 

sophisticated networks that are going to introduce them to the VC 

that's just going to write them that million-dollar check, because we 

went to the same school, and I just really believe in what you've got. We 

just don't have that network. And so angel investors really do play an 

important role for these early-stage founders. 

JENNIFER GARCIA, LATINO BUSINESS ACTION NETWORK323 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 73 
Related Developments 

The Commission’s most recent rulemaking agenda continues to indicate that it 

will consider amendments to Regulation D, including updates to the accredited 

investor definition and Form D.

324 In addition, Section 413(b)(2)(A) of Dodd-Frank 

Wall Street Reform and Consumer Protection Act requires the Commission to 

undertake a review of the accredited investor definition at least once every four 

years to determine whether the requirements of the definition should be adjusted 

or modified.325 In connection with any changes to or review of the income and 

net worth thresholds in the accredited investor definition, our office has urged the 

Commission to consider several important data matters: 

1. The impact any changes would have on racially and ethnically diverse founders

and populations located in rural areas.326 

2. When discussing the size of each of the private market and public market, it is

important to take into account the amount of capital raised by both operating

companies and pooled funds.327 For example, of the $2.9 trillion raised under

Regulation D over the 12-month period ended June 30, 2023, operating

companies raised only $299 billion, or approximately 10 percent, while pooled

funds raised the other 90 percent.328 

Regulation D Registered Offerings + Flows into 

Registered Funds 

Operating Companies 

$299 Billion 

over 21,758 oferings 

+ 

Pooled Funds 

$2.6 Trillion 

over 16,329 oferings 

Operating Companies 

$1.1 Trillion 

over 2,302 oferings 

+ 

Registered Funds 

$8.8 Trillion 

fows into registered funds 

Because the public and private markets differ in so many ways, particularly with 

respect to liquidity, it is difficult to estimate the relative size and growth rates of 

each market, but any such attempt to compare these markets should separately 

assess amounts raised by operating companies and pooled funds and be based on 

data reflecting the capital raised in each market. 

3. In evaluating the role of the accredited investor definition in offerings under

Regulation D, it is important to keep in mind that 81% of offerings under

Regulation D ($2.3 trillion over the 12-month period ended June 30, 2023)329 

were by a type of fund (3(c)(7) funds) that is unlikely to be affected by changes to

the accredited investor definition.330 The accredited investor definition is far more

relevant for 3(c)(1) funds, which accounted for only 4% of all offerings under

Regulation D ($130 billion over the 12-month period ended June 30, 2023).331 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 74 
Percentage of capital raised under Regulation D by issuer type: 

3(c)(7) Funds 

81% 

Other Funds 4% 

Operating 

Companies 

10% 

3(c)(1) Funds 4% 

Proposed Solution 

Based on the feedback we have received throughout our engagement with small 

businesses and their investors, we recommend proceeding with caution on any 

potential changes to Regulation D. We also recommend certain changes to the 

accredited investor definition and Regulation Crowdfunding, as set forth below. 

Regulation D: 

When considering changes to Regulation D, we urge the Commission not to make 

the Form D notice and associated disclosure requirements more burdensome, 

particularly for smaller operating companies raising smaller amounts of capital. 

Rationale: 

The Rule 506(b) safe harbor for the statutory exemption provided by Section 

4(a)(2) is by far the most frequently used method for raising capital.332 

Operating companies made up 55% of the total number of offerings under 

Regulation D since 2020 but accounted for only 12% of the total value of all 

such offerings. The other offerings were by pooled funds.333 

Any changes that result in deterring operating companies from relying on this 

safe harbor are likely to have a chilling effect on access to capital for smaller 

companies seeking to raise capital, particularly those that are already facing 

some of the greatest challenges accessing capital. It is also important to keep 

in mind that any changes that make compliance with Regulation D more 

costly may have the unintended result of driving companies to raise capital 

under the statutory Section 4(a)(2) exemption instead. 

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.334 

The Commission should consider the impact any change to the income and net 

worth thresholds would have on access to capital for women and racially and 

ethnically diverse founders and populations located in rural areas. This consideration 

and any review of the definition should expressly include a review of data regarding 

household income and net worth by race and ethnicity and by geographic location. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 75 
Rationale: 

As is clear from the data on wealth and income inequality across demographic 

groups,335 raising the wealth and income thresholds would have a 

disproportionate impact on entrepreneurs and investors of color. A more 

homogenous pool of accredited investors would negatively affect the ability of 

diverse entrepreneurs to raise capital.336 

In addition, increased wealth and income thresholds would have a 

disproportionate impact on geographic areas with a lower cost of living, 

including rural areas, which already tend to have less VC activity.337 

When evaluating amounts raised in reliance on Regulation D, the Commission should 

separately assess amounts raised by operating companies and pooled funds. Further, 

in considering data on the use of the accredited investor definition by pooled funds, 

amounts raised by 3(c)(7) funds should be excluded, as investors in those funds 

must be “qualified purchasers,” a much higher standard than the accredited investor 

definition. This will allow the Commission to focus more accurately on the effect any 

changes may have on capital raised by 3(c)(1) funds and other private funds, which 

are the funds most likely to be impacted by changes to the definition. 

Regulation Crowdfunding: 

The Commission or Congress should amend Regulation Crowdfunding338 to make it a 

more attractive capital-raising pathway, including by 

§ allowing flexibility in the type of accounting a company uses for small businesses

raising up to $500,000, and

§ increasing the offering size threshold under which an issuer may meet its financial

statements requirements by providing financial statements and income tax return

information certified by the principal executive officer.339 

Rationale: 

Although Regulation Crowdfunding has become more widely used,340 only a 

small fraction of capital is raised using this pathway.341 

Crowdfunding offerings have been a particularly important source of funding 

for women and founders of color342 and geographically diverse companies, 

with 70% of capital contributed outside the top 10 capital hubs.343 

Market participants report that existing reporting requirements for raising 

small dollar amounts through Regulation Crowdfunding are costly and 

outsized, creating practical barriers to relying on this pathway. For example, 

the requirements to have financial statements reviewed by an independent 

public accountant344 delay the ability to commence an offering and impose an 

upfront cost without a guarantee that the offering will be successful. Finding 

ways to reduce the costs associated with smaller offering sizes would help 

make Regulation Crowdfunding more attractive to small businesses looking to 

meet funding needs to grow and expand. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 76 
 

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

provision that excludes investment companies (or excluded companies under 

Section 3(b) or 3(c) of the Investment Company Act) from using the Regulation 

Crowdfunding exemption.345 

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.346 Entrepreneurs, 

investors, and other thought leaders report that this SPV model has not 

worked as well as intended due to the prescriptive requirements and the 

statutory prohibition on investment companies. 

“It’s remarkable how common

the problems are from one 

[entrepreneurial] ecosystem to

another . . . I think the fundamental

thing we’re trying to do is improve the

outcomes of entrepreneurs by being 

more collaborative, looking for ways to

open your network to them, 

or find ways to mentor them.

IAN HATHAWAY,

FAR OUT VENTURES347 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 77 
 

Connecting founders with savvy investors is essential 

to capital raising. 

Background Context 

Knowledgeable early-stage investors can be invaluable for early-stage companies, 

often bringing relevant industry experience, mentorship, business connections, 

strategic guidance, and follow-on financial support, all of which can have 

a significant and positive impact on a small business’s trajectory. Yet not all 

entrepreneurs have personal connections to sophisticated, early-stage investors with 

deep pockets and the right risk tolerance. Registered broker-dealers tend to provide 

their matchmaking services for larger offerings,348 but a company’s need to connect 

with savvy investors applies regardless of the 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.349 While the Commission has not included finders or an alternative 

approach on its agenda, this issue remains as timely today as ever. 

Demographic Impacts 

Women, racially and ethnically diverse, and rural founders often start with a smaller 

network of accredited, angel, and VC investors.350 Further, many report trouble 

finding professional support, advice, or role models in their network.351 The lack of 

access to networks of potential investors has a significant impact on capital raising, 

which further extends 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. 

“

If the success of entrepreneurs depends more on who they know 

than on what they can do, then the traditional rules serve to entrench 

class distinctions. Those who come from money and therefore have 

connections to wealth become successful entrepreneurs because they 

can raise the needed funds. Those who lack those connections may fail 

for lack of capital, despite their ability and innovations. 

BRIAN BECKON, CUTTING EDGE CAPITAL352 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 78 
Related Developments 

In October 2020, the Commission proposed an order353 that would permit natural 

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

without registering with the Commission as a broker-dealer. 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.354 

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.355 For decades, market participants have asked for clarity about the 

legal obligations of finders. We remain supportive of those calls and continue to 

recommend that Congress or the Commission provide additional regulatory clarity 

for finders. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team The importance of networks was

a theme we heard throughout 

the year, including in our 

October 2022 panel discussion

on “Latinx Venture Capitalists 

and Entrepreneurs: The State of

the Playing Field.” 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 79 
 

Emerging fund managers need support in order to continue 

to play their key role in funding startups, particularly those 

seeking smaller, early-stage checks. 

Background Context 

Founders seeking funding for their businesses beyond their personal network 

of friends and family or regional angel investors often turn to private funds of 

sophisticated pooled capital, like VC funds. Generally, larger, established funds 

tend to seek a consolidated number of larger investments to ensure they are 

managing a reasonable number of portfolio companies.356 Meanwhile, founders 

looking to raise smaller, earlier rounds, report challenges and decreasing interest 

from VC funds.357 VC funding activity has slowed and become more concentrated 

in large and established funds.358 The percentage of capital invested with emerging 

fund managers that tend to have smaller funds and write smaller checks dropped 

to a new decade low.359 

The impact of this challenge goes beyond the dollars raised in the round, as VC 

funding tends to result in a higher probability of additional investments and an IPO 

and a decreased probability of failure.360 

Demographic Impacts 

We continually hear through our outreach efforts, and data highlighted in this 

report shows, that women and racially and ethnically diverse fund managers face 

disproportionate challenges raising capital from institutional investors, resulting 

in smaller funds and in turn smaller investments in their portfolio companies.361 

Women and diverse fund managers are more likely to invest in diverse founders, so 

fundraising challenges for these managers may lead to fundraising challenges for 

diverse founders.362 

While investors and VC firms are showing an increased focus on diversity, equity, 

and inclusion, the enthusiasm that rose in 2020 for investing in diverse-founded 

companies has waned.363 In addition, we hear from market participants that recent 

litigation over funds’ use of diversity criteria may continue to curb that enthusiasm.364 

“

Women of color are the most founded, entrepreneurial demographic . . . 

They are just the least funded. 

ARIAN SIMONE, FEARLESS FUND365 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 80 
Related Developments 

Our prior Annual Reports have recommended that Congress and the Commission 

explore regulatory solutions to support emerging fund managers given the role these 

managers play in supporting startups, and in our 2022 Annual Report we included 

the following specifics: 

§ 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” that is excluded from the 20% non-qualifying

investment basket.

§ Increasing the current 100 beneficial owner limit for funds that rely on the

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

§ Increasing the limit on investors in, and expanding the $10 million maximum

fund size of, a “qualifying venture capital fund” under the exemption in Section

3(c)(1) of the Investment Company Act of 1940.366 

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

in the Investment Advisers Act of 1940. Congress would need to act to amend 

the beneficial owner limit and “qualifying venture capital fund” definition in the 

Investment Company Act of 1940. 

Proposed Solution 

Emerging fund managers play a key role in capital formation for startups, and we 

reaffirm the recommendations in our prior Annual Reports as follows: 

The Commission should amend Rule 203(l)-1 of the Investment Advisers Act of 

1940 by defining “venture capital fund” to include investments by venture capital 

funds into other venture capital funds, often called “fund of funds” investments, 

as “qualifying investments” that would be excluded from the 20% non-qualifying 

basket limit. 

Rationale: 

A fund of funds model would permit larger funds to invest in smaller funds, 

managed by emerging managers, that write smaller checks, potentially 

unlocking capital otherwise earmarked for later-stage companies to be 

reallocated to early-stage companies.367 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 81 
Congress should amend the exemption in Section 3(c)(1) of the Investment Company 

Act of 1940 to increase the limit on the number of beneficial owners.368 

Rationale: 

Limiting a 3(c)(1) fund to 100 beneficial owners makes it difficult for 

emerging fund managers – who may not have access to a network of 

investors who can write large checks – to raise a sufficient amount of capital. 

Congress should further amend Section 3(c)(1) to increase the limit on investors in, 

and the $10 million maximum fund size of, a “qualifying venture capital fund.”369 

Rationale: 

A qualifying venture capital fund can have no more than $10 million from 

no more than 250 investors. Raising the $10 million limit would improve 

the exemption’s utility by allowing for a diversified portfolio of investments 

and the fund’s operating costs. Assuming a “2 and 20” fee structure, a $10 

million fund would have only $200,000 per year for operating expenses, 

such as salaries, portfolio management, audit, diligence, and compliance. 

Expanding the $10 million cap and the related 250 investor limit, would 

equip emerging managers to raise a meaningful sized fund while covering 

their expenses. 

At the 2023 Women of Color

and Capital conference, our

Office joined a discussion

about the unique experience

for women of color as fund

managers and investors.

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 82 
Scale disclosures and harmonize requirements for 

small public companies to help them stay public. 

Background Context 

After a very busy 2021, IPO activity dropped considerably in 2022 and 2023.370 

While supply chains have normalized and inflation has eased, macroeconomic and 

geopolitical conditions remain challenging. Notably, monetary policy continued to 

tighten, likely contributing to the subdued IPO market. 

Despite the slow IPO environment and sustained decline in the number of public 

companies, market capitalization and profits for exchange-listed public companies 

thrived. At the same time, the portion of that aggregate market capitalization 

represented by small companies has continued its long-standing, steady decline, 

which suggests that while large companies are receiving the benefits of being public, 

many small ones are not.371 

Small public companies face considerable challenges. They continue to receive little 

research coverage, suffer heightened negative reactions to market events and lower 

liquidity, and feel the greater impact of regulatory costs that are fixed or not easily 

scaled for their size.372 Many small public companies also see their stock price suffer 

following their IPOs, as they struggle to comply with exchange rules.373 Without 

steps to improve the prospects of small public companies, their numbers are likely 

to continue to decline.374 To avoid this fate, fostering a regulatory environment that 

encourages smaller companies to remain public is as important as helping them 

go public. 

Demographic Impacts 

Despite a growing proportion of racially and ethnically diverse business owners 

and increased VC interest in founders of color, diverse owners still face significant 

challenges when trying to access capital.375 Similarly, although women founders 

had a relatively strong year in some aspects of capital raising, they remain 

underrepresented among business owners.376 An ecosystem in which early-stage 

capital formation is disproportionately challenging for diverse and women founders 

unsurprisingly yields public company boards and management teams in which 

people of color and women are underrepresented.377 In the case of small public 

companies, it is especially telling that women represent only a fraction of C-suite 

executives and that progress toward parity in directorships has slowed.378 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 83 
 

Related Developments 

The success of our capital markets cannot rest exclusively on the shoulders of large 

companies. In our 2022 Annual Report, we recommended being mindful of how 

and whether SEC rules are promoting an environment that fosters small public 

companies going and remaining public. In particular, we recommended continued 

tailoring of the SEC’s disclosure and reporting framework to the complexity and size 

of operations of companies, either by scaling obligations or delaying compliance for 

the smallest of the public companies. 

In the past year, the Commission has adopted several rules that impose new 

disclosure requirements on public companies. In some of these rules, the Commission 

has scaled the new obligations or delayed compliance for small public companies, in 

some cases providing accommodations that were not initially proposed.379 In others, 

however, small public companies are not afforded any accommodations.380 

“

And that is the point at which a smaller cap company, even one that's 

been public a long time, will start to think about, ‘Is the regulatory 

burden worth the beneft of being public if we have no real public 

market benefts?’ 

HILLARY HOLMES, GIBSON, DUNN & CRUTCHER381 

Proposed Solution 

To address the challenges facing small public companies, it is imperative that we 

make the public market an environment that allows companies of all sizes to thrive. 

We recommend that the Commission consider ways to harmonize the frameworks 

governing Smaller Reporting Company (SRC) and Accelerated Filer definitions. 

Specifically, we recommend that the Commission again consider aligning the SRC 

and non-accelerated filer categories. This alignment would allow all SRCs to enjoy 

all the benefits of being non-accelerated filers—namely the exemption from the 

auditor attestation requirement under Section 404(b) of the Sarbanes-Oxley Act. 

Rationale: 

Aligning the definitions of SRC and non-accelerated filer would complement 

the Commission’s previous efforts to scale disclosure requirements for small 

public companies. It would also help to simplify a complex regulatory 

landscape, thus easing regulatory burdens on smaller companies. This could 

encourage more small companies to go public and make it easier for them to 

remain public. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 84 
In addition, we reaffirm our prior recommendation 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. Small public companies will benefit 

from seeing the disclosure that large public companies prepare in response to similar 

new requirements. 

During this year’s

SEC Small Business

Forum, panelists disc

what it takes to become

ussed

and stay a public

reporting company.

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

Introduction 

Expand educational resources 

Private offering changes 

Avenues connecting businesses 

and investors 

Support emerging fund managers 

Scale and harmonize small public 

company requirements 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 85 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 86 

ADVOCACY

What We Do 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
Outreach and Engagement 

Our outreach extends from coast to coast, across media platforms, and to a breadth of 

ENGAGING 

through 

outreach and 

education 

partners and organizations. What we learn through our engagement with small businesses, their 

investors, and other thought leaders in the small business marketplace informs our advocacy efforts 

throughout the year. 

Our Approach 

Our advocacy work relies on our ability to stay attuned to the needs of small business owners and 

their investors, and to respond in turn with information and resources that are meaningful and 

accessible across all stages of the capital-raising life cycle. We incorporate feedback and assess our 

outreach and educational resources on an ongoing basis to ensure our efforts stay relevant and 

accessible in an evolving market. 

Feedback 

REASSESS 

We measure the 

efcacy of our work, 

make improvements, 

and assess new 

engagement 

opportunities. 

CREATE 

We develop educational 

resources and bring 

those resources to life 

through our outreach 

eforts. 

LISTEN 

We engage with 

communities across the 

small business ecosystem 

to learn about capitalraising challenges and 

successes through 

conversations, events, 

and feedback 

surveys. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 87 
Outreach Events 

Throughout the year, we met with small businesses and their investors, as well as with entrepreneurial 

support organizations and other leaders in the marketplace, to gain perspectives on issues facing the 

small business ecosystem and to share OASB’s educational resources. Discussions provided insights on 

issues like the unique obstacles faced by women and diverse entrepreneurs, the importance of building 

and gaining access to networks, and how to increase diversity among capital allocators. Some of the 

events in which we engaged this year include: 

Q1 FY2022 Q2 FY2022 

Engaged with VC 

Include’s 2022 Fellows 

for a discussion of 

the SEC regulatory 

pathways available 

to start and manage 

a fund, including 

capital-raising options 

for emerging fund 

managers. 

Celebrated Hispanic 

Heritage Month 

with the SEC’s San 

Francisco Regional 

Office, hosting a panel 

discussion featuring 

Latinx VCs and 

entrepreneurs. 

Q1 FY2022 Q2 FY2022

Hosted our fourth 

annual Capital Call, 

styled after public 

companies’ earnings 

release calls and 

giving the public 

opportunities to ask 

live questions. 

Explored challenges 

faced by founders, the 

role policymakers can 

play in improving access 

to capital, and how small 

businesses and their 

investors can engage in 

the process to ensure 

their voices are heard in 

a startup policy webinar 

with hosted by Engine. 

Joined the Miami-Dade 

Mayor’s Office 

for a conversation 

with small business 

owners, with a special 

focus on Regulation 

Crowdfunding. 

Participated in National 

Entrepreneurship 

Week’s government 

office hours session to 

provide information 

about our Office’s 

advocacy work and to 

answer questions live 

from participants. 

Shared resources 

for entrepreneurs 

considering raising 

capital from investors 

at the U.S. Department 

of Energy’s Phase II 

SBIR/STTR Awardee 

Workshop – Preparing 

to Pitch. 

Joined DAV Patriot 

Boot Camp for a 

webinar on empowering 

veteran and military 

spouse entrepreneurs 

to navigate capitalraising pathways. 

30+EVENTS

22+ PARTNER 

 WITH 40+

ORGANIZATIONS ENGAGEMENTS 

WITH POTENTIAL 

COLLABORATORS 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 88 
Q3 FY2022 Q3 FY2022 Q4 FY2022 Q4 FY2022 

Discussed SEC 

resources, answered 

questions related to 

the securities laws, 

and heard feedback 

on issues faced by 

Transact Global’s 

community of diverse 

women fund managers. 

Joined the SO. 

Ambitious HBCU Tour, 

presented by Black 

Ambition, Techstars, 

and the Thurgood 

Marshall College 

Fund, in Atlanta, GA 

to discuss the Office’s 

mission and focus and 

to share capital-raising 

resources with students 

and entrepreneurs. 

Hosted the SEC’s 

42nd annual Small 

Business Forum. 

Shared resources for 

attorneys representing 

clients seeking to raise 

capital at the American 

Bar Associations’ 

Business Law Section’s 

Spring Meeting. 

Joined a summit 

hosted by the U.S. 

Minority Business 

Development Agency 

for a discussion on 

federal government 

resources and 

programs that support 

minority-owned small 

businesses. 

Joined the SEC's Office 

of Investor Education 

and Advocacy for 

a discussion with 

Indigenous small 

business owners and 

investors hosted by 

the University of New 

Mexico–Taos HIVE, 

highlighting earlystage funding options 

and resources for 

entrepreneurs. 

Joined the Nasdaq 

Entrepreneurial Center 

for a discussion about 

capital-raising pathways 

and educational 

resources to help 

prepare early-stage 

entrepreneurs to raise 

capital. 

Met with women 

business owners 

during a virtual session 

hosted by the North 

Dakota Women’s 

Business Center to 

discuss experiences 

raising capital and 

to share our Office’s 

educational resources. 

Joined a panel at the 

Women of Color and 

Capital Conference 

to discuss strategies 

and resources for 

women investors and 

fund managers as 

they seek to create a 

supportive ecosystem 

and opportunities for 

women of color. 

2.8K+ 

ATTENDEES 

34 

HOURS 

OF CONTENT 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 89 
42nd 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.382 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 42nd Forum, during which the Office hosted four 90-minute virtual sessions 

from April 24-27, 2023. Each day featured speakers with in-depth knowledge of the issues facing 

small businesses across the country, spotlighting the following topics: 

Exploring the Early-Stage Landscape: 

Trends and Strategies in Capital Raising 

April 

24 

Building Entrepreneurial Ecosystems: 

Laying the Groundwork to Support Small 

Businesses and Their Investors 

April 

25 

Investing in Small Businesses: Successes 

and Challenges Facing Smaller Funds 

April 

26 

Accessing the Public Markets: Becoming 

and Staying a Public Reporting Company 

April 

27 

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 September 26, 2023, the Commission delivered to Congress the 2023 Forum Report, which 

summarizes the Forum proceedings, including the recommendations developed by participants 

and the Commission’s responses to the recommendations. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 90 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 91 

Educational Tools and Resources 

We continue to hear from many people in the small business ecosystem struggling to navigate the complex 

capital-raising framework. As part of our efforts to make pathways to raising capital more accessible to 

small businesses and their investors, we have continued to develop and expand our educational resources, 

which are available through our Capital Raising Hub, a centralized portal for educational tools and 

resources for small businesses and their investors. 

Reaching our Audience: Visits to the Capital Raising Hub 

We continue to increase our reach to the public via the Capital Raising Hub, with visits to the Hub up 

over 160% from last fiscal year and views of our educational resources continuing to grow. 

 

 

 

 

 

 

 

 

 

63K+ 100K+ 255K+ 

VISITS TO THE NEW VISITORS VIEWS OF OUR 

CAPITAL ACROSS EDUCATIONAL TOOLS 

RAISING HUB RESOURCES AND RESOURCES 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 92 

This year we developed a new introductory roadmap to funding options, three new educational 

videos, and 10 new Building Blocks, and updated many of our existing resources. Our materials 

address all phases of the capital-raising life cycle and include: 

Getting Started: Understanding the Fundamentals 

Funding Roadmap 

In direct response to requests for more introductory-level resources, 

we launched a roadmap that guides users through the different 

options for funding a small business, from personal savings to 

grants and loans to capital-raising from investors. 

Navigate Your Options 

We continue 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, and 

expanding the resources available through the tool. 

Cutting Through the Jargon 

We also expanded our curated glossary of key terminology that makes 

the language of raising capital more accessible to small businesses and 

their investors. Adding several new terms to the gallery and adding 

valuable additional resources for users looking to learn more. 

Building Blocks 

This year, we added 10 new capital-raising topics to our suite of 

educational materials that break down fundamental securities 

law concepts into plain language. Like many of our materials, the 

expanded topics seek to address questions and feedback from 

prospective users through our outreach efforts. 

Capital Raising Video Gallery 

We added two new educational videos to our Capital Raising 101 series, 

one explaining the role of the SEC in small business capital-raising and 

another that walks through different types of investors. 

New in

FY2023 

10 New

Topics 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

Expanded

our Capital

Raising

video series 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 93 

Continuing the Journey: Exploring Pathways to Raise Capital 

Exempt Offerings 

Users can also find more detailed 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 Capital Raising Hub also includes resources on how to prepare for and 

conduct a registered public offering as well as the reporting and other 

requirements for public reporting companies. 

Rulemaking Video Gallery 

We provide videos that summarize the potential impact to small 

businesses and their investors of relevant policies or rulemaking 

initiatives from the Commission This year, we added a video 

summarizing the recently adopted Private Fund Advisor rules. 

The Landscape: Data, Research, and Other Resources 

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. 

Research Reports 

Reports and studies on capital-raising issues and trends from around 

the country are also available. 

Small Business Compliance Guides 

Users can find 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. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

Outreach and Engagement 

42nd Small Business Forum 

Educational Tools and Resources 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

New Vid

mma

eo 

and Su ry 

Chart 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 94 

COMMITTEE

Highlights 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
The Small Business Capital Formation Advisory Committee 

In addition to establishing the Office of the Advocate for Small Business Capital Formation, the 

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 publicly-traded 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. 

In May 2023, the Commission announced the appointment of 14 new members to the Committee, 

primarily to fill vacancies arising from the expiration of prior members' terms. The Commission is 

grateful for the service and contributions of both the outgoing and current members. 

ENGAGING 

through 

outreach and 

education 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 95 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 96 

Committee Members at the Beginning of the Fiscal Year383 

CARLA GARRETT, Chair 

Corporate Partner, 

Potomac Law Group PLLC 

Washington, DC 

GREGORY YADLEY, 

Secretary 

Partner, Shumaker, 

Loop & Kendrick, LLP 

Tampa, FL 

DONNEL BAIRD 

Founder and CEO, 

BlocPower LLC 

Brooklyn, NY 

KESHA CASH 

Founder and General Partner, 

Impact America Fund 

Oakland, CA 

BAILEY DEVRIES* 

Assoc. Administrator for 

the Office of Investment & 

Innovation, U.S Small Business 

Administration 

Washington, DC 

JEFFREY M. SOLOMON, Vice Chair 

Chief Executive Officer, 

Cowen, Inc. 

New York, NY 

YOUNGRO LEE, Assistant Secretary 

CEO and Co-Founder, 

NextSeed 

Houston, TX 

WILLIAM M. BEATTY* 

Securities Administrator of the 

Washington State Securities Division 

Olympia, WA 

GREGORY J. DEAN* 

Senior VP of the Office of 

Government Affairs, FINRA 

Washington, DC 

ROBERT FOX 

National Managing Partner, 

Professional Standards Group, 

Grant Thornton LLP 

Chicago, IL 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 97 

STEPHEN GRAHAM 

Co-Chair, Fenwick & West 

LLP’s Life Sciences Practice 

Seattle, WA 

BRIAN LEVEY 

Chief Business Affairs and 

Legal Officer, Upwork Inc. 

San Francisco, CA 

CATHERINE MOTT 

Founder & CEO BlueTree 

Capital Group, Allied Angels, 

and Venture Fund 

Pittsburgh, PA 

MARC OORLOFF 

SHARMA* 

Chief Counsel of the 

Office of the Investor 

Advocate, SEC 

Washington, DC 

SUE WASHER 

Founder & Former CEO, 

Applied Genetic Technologies 

Corporation 

Gainesville, FL 

SARA HANKS 

CEO and Co-Founder, 

CrowdCheck, Inc. 

Alexandria, VA 

SAPNA MEHTA 

GC & Chief Compliance Officer, 

Rise of the Rest Seed Fund; 

Associate General Counsel, 

Revolution 

Washington, DC 

JASON SEATS 

Chief Investment Officer, 

Techstars 

Austin, TX 

HANK TORBERT 

President, AltaMax, LLC 

New Orleans, LA 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 98 

Committee Members at the End of the Fiscal Year384 

ERICA DUIGNAN, Chair 

Founder and General 

Partner, 

Reign Ventures 

New York, NY 

JASMIN SETHI, Secretary 

Founder and CEO, 

Sethi Clarity Advisers 

Philadelphia, PA 

WEMIMO ABBEY 

Co-Founder and Co-CEO, 

Esusu 

Los Angeles, CA 

WILLIAM M. BEATTY* 

Securities Administrator of 

the Washington State 

Securities Division 

Olympia, WA 

GEORGE COOK 

Co-Founder and CEO, 

Honeycomb Credit 

Pittsburgh, PA 

SUE WASHER, Vice Chair 

Founder and Former CEO, 

Applied Genetic Technologies 

Corporation 

Gainesville, FL 

DAVYEON ROSS, Assistant Secretary 

Co-Founder and President, 

DDSport/ShotTracker 

Overland Park, KS 

DONNEL BAIRD 

Founder and CEO, 

BlocPower LLC 

Brooklyn, NY 

STACEY BOWERS 

Professor, University of 

Denver Strum College of Law; 

Of Counsel, 3Pillars Law, PLLC 

Denver, CO 

VINCENT CORDERO 

Partner, Co-CEO, and CBO 

Mucho Mas Media 

Miami, FL 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 99 

MARCIA DAWOOD 

Venture Partner, 

Mindshift Capital 

Charlotte, NC 

BAILEY DEVRIES* 

Assoc. Administrator for 

the Office of Investment & 

Innovation, U.S. Small 

Business Administration 

Washington, DC 

HERBERT DRAYTON III 

Founder and Managing 

Partner, HI Mark Capital 

Charleston, SC 

LAURA NIKLASON 

Founder, President, and CEO 

Humacyte 

Durham, NC 

MARC OORLOFF SHARMA* 

Asst. Dir. & Chief Counsel, 

Office of the Investor 

Advocate, SEC 

Washington, DC 

GERGORY J. DEAN* 

Senior VP of the Office of 

Government Affairs, FINRA 

Washington, DC 

BART DILLASHAW 

Founder, Enterprise Legal Studio 

Omaha, NE 

DIEGO MARISCAL 

Founder, CEO, and Chief 

Disabled Officer, 

2Gether-International 

Washington, DC 

AREN SHARIFI 

Attorney, 

Kutak Rock LLP 

Denver, CO 

DENNIS R. SUGINO 

Founder, 

Kansa Advisory LLC 

Huntington Beach, CA 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 
Summary of Committee Activities 

The Committee met four times during FY2023. Materials from the meetings, including agendas, transcripts, 

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

Meeting Date Agenda Topics 

October 13, 2022 Entrepreneurial Ecosystems; The Going Public Market 

February 7, 2023 Alternatives to Traditional Financing; SEC Proposal on Private Fund 

Reforms; Role of Equity Research for Smaller Public Companies 

June 14, 2023 Funding Gaps for Underrepresented Founders and Startups 

September 19, 2023 Investors in Funds that Support Early-Stage Companies; 

Alternative Funding Options for Small Businesses 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 100 
 

Summary of Committee Recommendations 

During FY2023, the Committee put forward five recommendations to the Commission. 

Recommendation Topic Adoption Date 

Entrepreneurial Ecosystems October 13, 2022 

Becoming a Public Company October 13, 2022 

Availability of Public Company Research February 28, 2023 

Private Fund Proposal February 28, 2023 

Parting Perspectives Letter February 28, 2023 

The Committee’s recommendations included a Parting Perspectives Letter, delivered as the inaugural 

members’ four-year terms drew to a close. The letter urged attention to the following objectives: 

1. Recognize the importance of the private markets for small business growth.

2. Ensure public company rules are mindful of the unique circumstances of small public

companies, so that these small companies can attract capital, spur innovation, and create jobs.

3. Allow retail investors greater access to a wider range of investment opportunities.

4. Support rules to facilitate the existence and growth of small funds.

5. Continue to protect investors through effective enforcement and more education and outreach.

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

The Small Business Capital 

Formation Advisory Committee 

Committee Members at the 

Beginning of the Fiscal Year 

Committee Members at the 

End of the Fiscal Year 

Summary of Committee Activities 

Summary of Committee 

Recommendations 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 101 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 

ENDNOTES

All the Details 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

102 
1 See Brendan Cosgrove, et al., “Access to Capital 

for Entrepreneurs: Removing Barriers. 2023 

10 

11 

See Brendan Cosgrove, et al., supra note 1, at 4. 

See Goldman Sachs, ”New Survey of Small 

Update,” (June 2023) at 2, available at https:// 

www.kaufman.org/wp-content/uploads/2023/06/ 

Access-to-Capital-for-Entrepreneurs-Report-2-

Business Owners Shows a Credit Crunch is 

Hindering Growth,” (Oct. 25, 2023) available at 

https://www.goldmansachs.com/citizenship/10000-

2 

June-2023.pdf. 

See NVCA, “2023 Yearbook,” (Mar. 22, 2023) 

at 21 (for the mature and later-stage business 12 

small-businesses/US/voices/news/oct-25-2023-

press-release.html. 

See Reimagine Main Street, supra note 8, 

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

uploads/2023/03/NVCA-2023-Yearbook_ 

FINALFINAL.pdf. The small public company 

13 

at slide 8. 

See Small Business Majority, “Opinion poll. Small 

businesses share concerns with recent banking 

industries are based on DERA estimates. Small 

public companies include U.S. public companies 

with a size less than or equal to $250 million on 

closures, access to capital changes,” (May 3, 2023) 

at 2, available at https://smallbusinessmajority.org/ 

sites/default/fles/research-reports/2023_Banking_ 

the date of the ofering, calculated by multiplying 

price of the company’s stock at the close of the 

day of the ofering by the number of outstanding 

shares on the day of the ofering. See infra notes 

57 and 144 for a description of how these amounts 

were estimated. 

14 

Survey.pdf. The survey was conducted in 

April 2023. 

See skynova, “Why startups failed in 2022,” 

available at https://www.skynova.com/blog/topreasons-startups-fail. Of the failed startups, 47% 

was due to lack of fnancing/investors, and 44% 

3 Id. at 7-8 (noting that VCs typically invest in 

young companies with high-growth potential in 

need of capital to grow) and 10 (noting VC-backed 

15 

16 

was due to running out of cash. 

See Brendan Cosgrove, et al., supra note 1, at 44. 

Id. Other business professionals included lawyers 

4 

companies are job creators). 

See U.S. Small Business Administration Ofce of 

Advocacy, “Frequently Asked Questions March 

17 

and accountants as examples. 

See Sheharyar Bokhari, et al. “Is Innovation 

Really in a Place? Accelerator Program Impacts 

2023” (Mar. 2023) at 1, available at https:// 

advocacy.sba.gov/wp-content/uploads/2023/03/ 

Frequently-Asked-Questions-About-Smallon Firm Performance,“ MIT Center for Real 

Estate Research, (July 21, 2021) at 32, available at 

https://papers.ssrn.com/sol3/papers.cfm?abstract_ 

Business-March-2023-508c.pdf; U.S. Small 

Business Administration Ofce of Advocacy, 

“What’s New with Small Business? March 2023,” 

id=3881997. See also Chris Minchella, “How do 

startup Accelerators work?,” Gust (July 25, 2023) 

available at https://gust.com/blog/how-do-startup5 

6 

(Mar. 21, 2023) available at https://advocacy.sba. 

gov/2023/03/14/whats-new-with-small-business/. 

See U.S. Small Business Administration Ofce of 

Advocacy, “What’s New with Small Business?,” 

supra note 4. 

See U.S. Small Business Administration 18 

accelerators-work/; Ron Miller, “Don’t go it alone: 

Incubators and accelerators help build lifelong 

relationships,” Tech Crunch (Apr. 26, 2023) 

available at https://techcrunch.com/2023/04/26/ 

incubators-accelerators-startups-relationships/. 

See James Ulan and Vince Harrison, “Quantifying 

Ofce of Advocacy, “What’s New with Small 

Business?,” supra note 4. See U.S. Small Business 

Administration Ofce of Advocacy, “Frequently 

the Success of YC and the Largest Accelerators. 

Takeaways for VCs, LPs, and Startups,” 

PitchBook, (June 8, 2023) at 22-23, available 

7 

Asked Questions March 2023,” supra note 4, at 1. 

See Babson College, “Global Entrepreneurship 

Monitor (GEM) 2022-2023 United States Report” 

at https://fles.pitchbook.com/website/fles/pdf/ 

Quantifying_the_Success_of_YC_and_the_ 

Largest_Accelerators_Takeaways_for_VCs_LPs_ 

(2023) at 10, available at https://issuu.com/ 

babsoncollege/docs/brndrep4-2795-gem-2023-

fnal-pages. 

19 

and_Startups.pdf. 

Id. at 3, 5; See Catherine Cote, “Startup Incubator 

vs. Accelerator: Which is Right for You?,” Harvard 

8 See Reimagine Maine Street, “Trust & Access 

to Capital,” (June 12, 2023) at slide 4, available 

at https://irp.cdn-website.com/d59a11d2/fles/ 

Business School Online (Aug. 17, 2023) available at 

https://online.hbs.edu/blog/post/startup-incubatorvs-accelerator. 

9 

uploaded/Survey%20Findings%20for%20 

2023%20vWebsite.pdf. 

See Federal Reserve Banks, “Small Business 

20 

21 

See Catherine Cote, supra note 19. 

See Federal Reserve Banks, “Small Business Credit 

Survey, 2023 Report on Employer Firms,” supra 

Credit Survey, 2023 Report on Employer Firms,” 

(Mar. 2023) at i, available at https://www. 

fedsmallbusiness.org/survey/2023/report-onnote 9, at 7. Data from Excel “Employer Firms” 

tab. In addition, 56% raised prices the business 

charges, 32% cut staf, hours, or downsized 

employer-frms. See Federal Reserve Banks, “Small 

Business Credit Survey, 2022 Report on Employer 

Firms,” (May 6, 2022) at 7, available at https:// 

operations, 23% altered their payments or did not 

make a payment, 5% reported no action, and 4% 

took other actions in response to the challenges. 

www.fedsmallbusiness.org/survey/2022/report-onemployer-frms. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 103 
 

22 See Thaddeus Swanek, “New Survey Shows Small 41 See Kyle Stanford et al., “Venture Monitor Q2 

Businesses’ Growing Concern About 2023,” PitchBook-NVCA (July 12, 2023) at 9, 

Raising Capital,” U.S. Chamber of Commerce, available at https://pitchbook.com/news/reports/q2-

(Mar. 29, 2023) available at https://www.uschamber. 2023-PitchBook-nvca-venture-monitor. 

com/small-business/new-survey-shows-small- 42 Id. Data from Excel tab “Angel & Seed Activity.” 

businesses-growing-concern-about-raising-capital. 43 See Dropbox Docsend, “The pre-seed round 2022-

23 See Federal Reserve Banks, “Small Business Credit 2023. From FOMO to JOMO: VCs shift from rapid 

Survey, 2023 Report on Employer Firms,” supra note growth to long-term risk aversion,” (2023) at 12, 

9. Data from Excel “Employer Firms” tab, “Equity available at https://experience.dropbox.com/form/ 

investments,” question “Share of fnancing applicants docsend/fundraising-report; Dropbox Docsend, 

that sought an equity investment.” “The seed round in 2022-23. No time like the 

24 See Brendan Cosgrove et al., supra note 1, at 9. present? VCs, founders focus on ‘why now?’ amid 

25 See Thaddeus Swanek, “Small Business Survey Shows ongoing slowdown,” (2023) at 15, available at 

Record Optimism, Despite Infation Concerns,” U.S. https://www.docsend.com/es/blog/seed-fundraisingChamber of Commerce, (June 28, 2023) available round-in-2022-23/. 

at https://www.uschamber.com/small-business/small- 44 See Dropbox Docsend “The pre-seed round 2022-

business-survey-shows-record-optimism. 2023,” supra note 43, at 2. The data refects a 

26 See Federal Reserve Banks, “Small Business Credit comparison of the second quarter of 2021 to the 

Survey, 2023 Report on Employer Firms,” supra note second quarter of 2023. 

9, at 11, 17. Data from Excel “Employer frms” tab, 45 See Carta, “Raising Capital and Navigating 

question: “Best outcome across loan/LOC/merchant Equity Ownership,” (Jan. 11, 2023) at 28, 36, 

cash advance application(s),” Percentage values: All available at https://ic.dcsbdc.org/DocumentMaster. 

(100%), Most (51-99%), Some (1-50%), and None. aspx?doc=2998. The median percentages reserved 

27 See Jefrey Sohl, “The Angel Market in 2022: The for employee stock compensation range from 12.9% 

Rising Impact of Women Angels,” Center for Venture for $1M to $10M in valuation to 19.6% for $1B to 

Research, (May 20, 2023) at 1, available at https:// $10B in valuation. 

paulcollege.unh.edu/sites/default/fles/resource/fles/ 46 See Jefrey Sohl, supra note 27, at 2. 

fy_2022_analysis_report_fnal.pdf. 47 See Dropbox Docsend “The pre-seed round 2022-

28 Id. 2023”, supra note 43, at 19; Dropbox Docsend, 

29 Id. “The seed round in 2022-2023”, supra note 43, at 9; 

30 Id. at 2. Dropbox Docsend, “The Pre-seed round in 2021-

31 See Angel Capital Association, “Angel Funders 2022. Adapting the pitch deck for a new market,” 

Report 2023,” (Dec. 2023) at 7, available at https:// (2022) at 18, available at https://www.docsend. 

www.angelcapitalassociation.org/angel-funders- com/blog/the-pre-seed-round-in-2021-22/; Dropbox 

report-2023/. Docsend, “The seed round in 2021-2022. Proving 

32 Id. at 13. market ft and monetization amid uncertainty,” 

33 See Jefrey Sohl, supra note 27, at 2. See Jefrey Sohl, (2022) at 19; Dropbox Docsend, “The Pre-Seed 

“The Angel Market in 2021: Metrics Indicate Strong Round in 2020: New Investor Priorities Emerge,” 

Market,” Center for Venture Research, (May 20, (2021) at 13; Dropbox Docsend, “The Seed Round in 

2022) at 2, available at https://scholars.unh.edu/cgi/ 2020-2021: Make or Break Moment for Founders,” 

viewcontent.cgi?article=1036&context=cvr. (2021) at 17. 

34 See Jefrey Sohl, supra note 27, at 1. 48 See Kyle Stanford, et al., supra note 41. Data from 

35 See Angel Capital Association, supra note 31, at 41. Excel “Angel & Seed x Size” tab. This graph depicts 

36 Id. at 12. the combined angel and seed market. However, the 

37 See Jefrey Sohl, supra note 27, at 2. angel market constitutes a small part of the combined 

38 See Angel Resource Institute 2022, “HALO Report: market values. From January 2019 to June 2023, the 

Annual Report on Angel Investments,” (2023) at 7, angel activity was between 11.6% and 2.8% of the 

available at https://angelresourceinstitute.org/reports/ combined angel and seed market value refected in the 

HALO2022-email.pdf. Puerto Rico is included in the graph. Undisclosed deals were excluded. 

Southeast region, Hawaii is included in the California 49 Id. Data from Excel “Median Deal Size” tab. 

region, and Alaska is included in the Northwest region. 50 See Gené Teare, “These 3 Charts Show It’s not Easy 

39 See Jaclyn Robinson, “What is Pre-Seed Funding?,” Being a Seed Startup These Days,” Crunchbase News 

Crunchbase (Mar. 17, 2022) available at https:// (May 31, 2023) available at https://news.crunchbase. 

about.crunchbase.com/blog/what-is-pre-seed- com/seed/charts-startup-venture-funding-rounds/. 

funding/. The pre-seed round defnition overlaps Median time shown for startups that raised at least 

to some extent with the defnition of a seed round. $1 million in their seed stage before raising a Series A. 

Typically, a pre-seed round is an investment in an 51 See Kyle Stanford, “Capital Concentration and Its 

idea. In other words, it is an investment in a product Efect on the VC Ecosystem,” PitchBook (Feb. 16, 

that has not yet found its market. On the other hand, 2023) at 7, available at https://pitchbook.com/news/ 

a company may seek seed funding for a product reports/q1-2023-PitchBook-analyst-note-capitalthat already exists and typically has some form of a concentration-and-its-efect-on-the-vc-ecoystem. Data 

customer base. from Excel “Distance X Stage” tab. 

40 See https://www.sec.gov/jargon-z#S. 52 Id. at 7. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 104 
 

53 See Kyle Stanford, et al., supra note 41. Data from 59 17 C.F.R. § 230.504; see https://www.sec.gov/ 

Excel “Fundraising x size” tab. smallbusiness/exemptoferings/rule504. 

54 See Marina Temkin, “Investor Appetite, 60 The estimated fows are based on DERA data for 

Microfunds Help Seed Investing Defy Startup the period July 1, 2022 to June 30, 2023. Flow 

Drubbing,” PitchBook (Feb. 10, 2023) available at data is derived from amounts reported on Form 

https://pitchbook.com/news/articles/vc-investment- N-PORT and Form N-MFP. Total aggregate net 

seed-stage; see also Ofce of the Advocate for fows into and out of registered open-end mutual 

Small Business Capital Formation Annual Report funds, exchange-traded funds, and money market 

Fiscal Year 2022 at 29, available at https://www. funds during the same period were $654 billion. 

sec.gov/fles/2022-oasb-annual-report.pdf. 61 17 C.F.R. § 230.506(b); See https://www.sec.gov/ 

55 See Ofce of the Advocate for Small Business smallbusiness/exemptoferings/rule506b. 

Capital Formation, supra note 54, at 29. 62 17 C.F.R. § 227.100 et seq.; See https:// 

56 See Marina Temkin, “Micro-Fund Managers Feel www.sec.gov/smallbusiness/exemptoferings/ 

Defated as LPs Cool on VC,” PitchBook, (Apr. regcrowdfunding. 

21, 2023) available at https://pitchbook.com/news/ 63 “Other exempt oferings” includes estimated 

articles/micro-funds-VC-fundraising-decrease-LPs. amounts raised under Regulation S and Rule 144A 

57 This graphic is based on DERA data. Unless for calendar year 2022. The data used to estimate 

otherwise indicated, the data period for DERA the amounts raised in 2022 for other exempt 

data is July 1, 2022 to June 30, 2023. Data on oferings includes: (1) oferings under Regulation 

oferings under Regulations D and Regulation S that were collected from Thomson Financial’s 

Crowdfunding is based on information reported SDC Platinum service; and (2) resale oferings 

by companies and was collected from EDGAR under Rule 144A that were collected from 

flings (new flings and amendments) on Forms D Thomson Financial’s SDC New Issues database, 

and C, respectively. Data on registered oferings the Mergent database, and the Asset-Backed Alert 

was collected from Thomson Financial’s SDC and Commercial Mortgage Alert publications, 

Platinum database. For oferings under Regulation to further estimate the exempt oferings under 

Crowdfunding, except where specifed otherwise, Regulation S. We include amounts sold in Rule 

estimates of the number of oferings are based on 144A resale oferings because those securities are 

oferings completed during this period as shown typically issued initially in a transaction under 

on progress updates on Form C-U; estimates of Section 4(a)(2) or Regulation S but generally are 

amounts raised are based on proceeds reported not included in the Regulation S data identifed 

in progress updates fled on Form C-U during the above. These numbers are accurate only to the 

report period. For oferings under Regulation A, extent that these databases are able to collect such 

except where specifed otherwise, estimates of information and may understate the actual amount 

the number of oferings are based on oferings of capital raised under these oferings if issuers 

qualifed during this period, excluding post- and underwriters do not make this data available. 

qualifcation amendments; estimates of amounts We do not yet have data to provide an estimated 

raised are based on proceeds reported in flings amount raised under Regulation S and Rule 144A 

made during the report period. Capital raised is for the 12-month period ended June 30, 2023. 

based on information reported by companies in 64 See https://www.sec.gov/investor/alerts/ipoForms 1-Z, 1-K, 1-SA, 1-U, and ofering circular investorbulletin.pdf for more information. 

supplements pertaining to completed and ongoing 

Regulation A oferings and post-qualifcation 

65 17 C.F.R. § 230.251 et seq.; see https://www.sec. 

gov/smallbusiness/exemptoferings/rega. 

amendments, and for companies whose shares 66 15 U.S.C. § 77a, et seq.; see https://www.sec.gov/ 

have become exchange-listed, information from 

other public sources. Estimates represent a lower 

bound on the amounts raised given the timeframes 

67 

smallbusiness/goingpublic. 

This graphic is based on DERA data. See 

supra note 57 for a description of how these 

for reporting proceeds following completed or 

terminated oferings and that oferings qualifed 

during the report period may be ongoing. For the 

amounts were reported or estimated. Small 

public companies include U.S. public companies 

with a size less than or equal to $250 million 

oferings that permit pooled investment funds, 

such as Rule 506(b) and (c) of Regulation D and 

registered oferings, the data includes oferings 

on the date of the ofering, calculated by 

multiplying price of the company’s stock at the 

close of the day of the ofering by the number 

58 

conducted by pooled investment funds. 

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

of outstanding shares on the day of the ofering. 

See infra note 144 for a description of how these 

smallbusiness/exemptoferings/rule506c. amounts were estimated. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

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53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 105 
68 This graphic is based on DERA data. This graphic 

presents capital raised in registered, Regulation 

74 The map included depicts the amounts reported 

or estimated as raised by issuers, including pooled 

D, and Regulation A oferings across the top 

industries from July 1, 2022 through June 30, 

2023. Oferings by non-pooled investment funds 

investment funds that report a primary location 

in the U.S., including U.S. territories, from July 1, 

2022 through June 30, 2023. See supra note 57 for 

in other industries accounted for approximately 

$25 billion, $79 billion, and $46 million in 

a description of how these amounts were reported 

or estimated. 

registered, Regulation D, and Regulation A 75 Because of lags in ofering qualifcations, 

oferings, respectively. Regulation A and registered 

oferings were classifed into industry groups 

based on the primary SIC code reported by the 

company. Industry groups were self-reported by 

companies on Form D. Diferences in data sources 

and defnitions may limit the comparability of 

industry data. Oferings by pooled investment 

funds, which accounted for approximately $63 

billion and $2.1 trillion in registered oferings and 

Regulation D, respectively, are excluded from this 

withdrawals, and abandonments, for greater 

comparability, this analysis considers all initiated 

Regulation A oferings (whether qualifed or 

not) and does not exclude oferings 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 $ millions) 

in qualifed Regulation A oferings and not on 

69 

graphic. See supra note 57 for a description of how 

these amounts were reported or estimated. 

See Crowdfund Capital Advisors, “Investment 

Crowdfunding. Democratizing Access to Capital 

Across the USA. 2022 Annual Report,” (Mar. 

2023) at 38, 45, 47, 55, 59, available at https:// 

crowdfundcapitaladvisors.com/preview-the2022-investment-crowdfunding-annual-report76 

reported proceeds. Efective 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 https://www.sec.gov/corpfn/ 

facilitating-capital-formation-secg. 

See David S. Krause, “A Comprehensive Study 

of Regulation A Oferings Since Implementation 

70 

what-a-wild-ride/; Crowdfund Capital Advisors, 

“Investment Crowdfunding Stumbled In 2022 

– Investors Pull Back As More Sophisticated 

Companies Seek Capital Online,” (Jan. 4, 2023) 

available at https://crowdfundcapitaladvisors. 

com/investment-crowdfunding-stumbled-in2022-investors-pull-back-as-more-sophisticatedcompanies-seek-capital-online/.

This graphic is based on DERA data. Because 

77 

of the JOBS Act,” (Apr. 17, 2023) at 12, 16, 

available at https://papers.ssrn.com/sol3/papers. 

cfm?abstract_id=4410884. 

The map included depicts the amounts reported or 

estimated as raised by issuers that report a primary 

location in the U.S., including U.S. territories, from 

July 1, 2022 through June 30, 2023. See supra 

note 57 for a description of how these amounts 

were reported or estimated. 

of lags in ofering qualifcations, withdrawals, 

and abandonments, for greater comparability, 

this analysis considers all initiated Regulation 

78 

79 

See Kyle Stanford, et al., supra note 41. Data from 

Excel “Deals x State” tab. 

Id. 

Crowdfunding oferings and does not exclude 

oferings that are subsequently withdrawn or 

abandoned.

80 

81 

See Kyle Stanford, supra note 51, at 7. Data from 

Excel “Distance x Stage” tab. 

See NVCA, supra note 2, at 7. 

71 This graphic is based on DERA data. Because 

of lags in ofering qualifcations, withdrawals, 

and abandonments, for greater comparability, 

82 Id. at 9. See NVCA, “2022 Yearbook,” (Mar. 

2022) at 10, available at https://nvca.org/wpcontent/uploads/2022/03/NVCA-2022-Yearbookthis analysis considers all initiated Regulation 

Crowdfunding oferings and does not exclude 

oferings that are subsequently withdrawn or 

83 

84 

Final.pdf. 

See NVCA, supra note 2, at 7. 

See Kyle Stanford, et al., supra note 41. Data from 

abandoned. Efective March 15, 2021, the 

maximum aggregate amount that an issuer is 

permitted to raise under Regulation Crowdfunding 

Excel “Deal x State” tab. Early-stage includes 

Series B and earlier, which includes the PitchBook 

segmentation of Angel and Seed and Early-stage. In 

72 

in a 12-month period was raised to $5 million 

(from $1.07 million). See https://www.sec.gov/ 

corpfn/facilitating-capital-formation-secg. 

This graphic is based on DERA data. The map 

included depicts the amounts reported or estimated 

as raised by issuers that report a primary location 

in the U.S., including U.S. territories, from July 1, 

2022 through June 30, 2023. See supra note 57 for 

a description of how these amounts were reported 85 

2022, total deal value was $246.53 billion. Earlystage (Series B and earlier) deal value was $95.3 

billion, which includes deal value for Angel and 

Seed and Early-stage of $24.8 billion and $70.6 

billion respectively. Total deal count was 17,504. 

Early-stage (Series B and earlier) deal count was 

12,198, which includes Angel and Seed and Earlystage deal count of 7,090 and 5,108, respectively. 

See NVCA, supra note 2, at 8. 

or estimated. 

73 See supra note 57 for a description of the 

methodology used to calculate this data. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 106 
86 Id. at 9. See Jeremy Greenwood et al., “Venture 

Capital: A Catalyst for Innovation and Growth,” 

98 See Kyle Stanford, et al., supra note 41, at 42. 

Excel data from “Fundraising Activity” tab. 

(Apr. 21, 2022) at 3, available at https:// 

fles.stlouisfed.org/fles/htdocs/publications/ 

review/2022/04/06/venture-capital-a-catalyst-for99 Id. Data from Excel “Fundraising x size” tab. 

See Cameron Stanfll, et al., “Venture Monitor 

Q2 2022, PitchBook, (July 13, 2022) available 

87 

innovation-and-growth.pdf. 

See Max Navas and Alyssa Williams, “The 

Transient Era of Billion-Dollar Funds,” PitchBook, 

at https://pitchbook.com/news/reports/q2-2022-

PitchBook-nvca-venture-monitor. Data from Excel 

“Fundraising x Size” tab. 

(Apr. 6, 2023) at 5, available at https://pitchbook. 

com/news/reports/q2-2023-PitchBook-analystnote-the-transient-era-of-billion-dollar-funds. 

100 See Kyle Stanford, et al., supra note 41, at 42. Data 

from Excel “Fundraising Activity” tab. 

101 Id. Data from Excel “Fundraising x Size” tab. See 

88 

89 

See NVCA, supra note 2, at 9. 

See Ofer Eldar and Jillian Grennan, “Common 

Venture Capital Investors and Startup Growth,” 

NVCA, supra note 2, at 14. 

102 See Steve Taplin, “What Is Dry Powder, And Will 

It Afect Technology in 2023?,” Forbes, (Mar. 

The Review of Financial Studies, (Sept. 9, 2023) 

at 3 (citing Kaplan and Stromberg 2003; Fried 

and Ganor 2006; Bengtsson and Sensoy 2015), 

17, 2023) available at https://www.Forbes.com/ 

sites/Forbestechcouncil/2023/03/17/what-is-drypowder-and-how-will-it-afect-technology-in90 

available at https://academic.oup.com/rfs/advancearticle/doi/10.1093/rfs/hhad071/7265414. 

See Ofer Eldar and Jillian Grennan, supra note 

2023/?sh=27d6f9d11af7; see also Berber Jin, 

“Venture Fundraising Hits Nine-Year Low,” The 

Wall Street Journal, (Feb. 20, 2023) available at 

91 

89, at 4, 31-32, available at https://academic. 

oup.com/rfs/advance-article/doi/10.1093/rfs/ 

hhad071/7265414. 

See Michael Ewens and Denis Sosyura, 

“Irreplaceable Venture Capitalists,” (June 2023) 

at 3-4, available at https://www.public.asu. 

https://www.wsj.com/articles/venture-fundraisinghits-nine-year-low-c2b4774; NVCA, supra note 2, 

at 14. 

103 See Kyle Stanford, et al., supra note 41, at 42. 

104 See NVCA, supra note 2, at 15. See Kyle Stanford, 

et al., supra note 41. Data from Excel “Emerging 

92 

edu/~dsosyura/ResearchPapers/Irreplaceable%20 

Venture%20Capitalists.pdf. 

See NVCA, supra note 2, at 20. Data from Excel 

vs Experienced funds” tab. Emerging funds are 

defned as frms that have launched fewer than 

four funds. Experienced funds are defned as frms 

“Deal Activity” tab. See also Michael Casey, “A 

difcult pivot looms for venture capital,” Financial 

Times, (Mar. 23, 2023) available at https:// 

that have opened four or more funds. 

105 See Max Navas and Susan Hu, “Challenges 

for Emerging Managers,” PitchBook, (June 23, 

93 

www.ft.com/content/f8f6144a-1901-4391-9abf072224d132c7. 

See NVCA, supra note 2, at 14, 16. Data 

2023) at 3, available at https://pitchbook.com/ 

news/reports/q2-2023-PitchBook-analyst-notechallenges-for-emerging-managers. 

from Excel “Early Stage Activity”, “Late Stage 

Activity”, and “Venture Growth Activity” tabs. 

Later-stage includes Series C and up – using 

106 See “Emerging Fund Manager Report – Q1 

2023,” Signature Block, (May 24, 2023) available 

at https://www.signatureblock.co/articles/emergingPitchBook data and is a combination of both 

Late Stage and Venture Growth Activity. Venture 

Growth includes Series E+ or deals involving 

fund-manager-report-q1-2023. 

107 See SS&C Intralinks, “2023 LP Survey. Insights 

on alternative investments,” (2023) at 13-14, 

companies that are at least seven years old and 

have raised at least six VC rounds. See Kyle 

Stanford, ”Q4 2022 PitchBook Analyst Note: 

Introducing Venture Growth,” PitchBook, (Nov. 

30, 2022) at 7, available at https://pitchbook.com/ 

news/reports/q4-2022-PitchBook-analyst-noteintroducing-venture-growth. Early-stage includes 

available at https://www.intralinks.com/insights/ebook/2023-lp-survey. 

108 Id. 

109 See Max Navas and Susan Hu, supra note 105. 

Data from Excel “Fundraising Activity – CSA.” 

110 Id. at 1. 

111 Id. at 2. 

94 

Series A and B. 

See Kyle Stanford, et al., supra note 41, at 12, 15. 

112 See NVCA, supra note 2, at 16. 

113 Id. 

95 

Data from Excel “Median Deal Size” tab. 

Id. Data from Excel “Deal Activity” tab. This 

graph does not include Angel and Seed Deals and 

114 See Kyle Stanford, et al., supra note 41. Data 

from Excel “Deal Activity” and “NTI” tabs; 

Kyle Stanford et al., “US VC Valuations Report,” 

Venture Growth deals. Venture Growth includes 

Series E+ or deals involving companies that are at 

least seven years old and have raised at least six 

PitchBook, (Aug. 9, 2023) at 4, available at https:// 

pitchbook.com/news/reports/q2-2023-us-vcvaluations-report. 

96 

VC rounds. See Kyle Stanford, supra note 93, at 7. 

See Kevin Dowd and Peter Walker, “State of 

115 See Max Navas and Alyssa Williams, supra note 

87, at 9. 

Private Markets: Q2 2023,” Carta, (July 28, 2023) 116 Id. See Kyle Stanford, et al., supra note 41. Data 

97 

available at https://carta.com/blog/state-of-privatemarkets-q2-2023/. 

Id. 

from Excel “Exits x Type” tab. 

117 See Kyle Stanford, et al., supra note 41. Data from 

Excel “Exits x previous round” tab. 

118 Id. Data from Excel “Exits x Type” tab. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 107 
 

119 This graphic is based on DERA data, including 

pooled funds. 

120 This graphic is based on DERA data, excluding 

IPOs fled by pooled funds. This graphic includes 

the top industries by IPO proceeds. Additional 

oferings by non-pooled fund issuers accounted for 

approximately $13.8 billion and $1.5 billion in 

the twelve months ended June 30, 2022 and June 

30, 2023, respectively. Pooled investment funds, 

including SPACs, accounted for approximately 

$63.1 billion and $3.2 billion in the twelve 

months ended June 30, 2022 and June 30, 2023, 

respectively. 

121 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 ofering have a 

size less than or equal to $250 million, calculated 

by multiplying the price of the company’s stock 

at the close of the day of the ofering by the 

number of outstanding shares on the day of the 

ofering. IPOs by large companies include IPOs 

by companies that after the non-SPAC ofering 

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 fll in missing information 

from SDC Platinum. Those companies missing 

a stock price on the ofering day or 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 ofering as provided in the above-listed 

databases. There have been signifcant downward 

revisions in the most recent estimates as the 

market capitalization of issuers are corrected in the 

databases. 

122 See Jay R. Ritter, “Initial Public Oferings: Updated 

Statistics,” at Table 4 (Oct. 23, 2023) available 

at https://site.warrington.uf.edu/ritter/fles/IPOStatistics.pdf. 

123 See Jay. R. Ritter, “Initial Public Oferings: VCbacked IPO Statistics Through 2022,” at Table 4 

(Oct. 20, 2023) available at https://site.warrington. 

uf.edu/ritter/fles/IPOs-VC-backed.pdf. 

124 Id. See also Brijesh Jeevarathnam et al., “Powerful 

Long-Term Trends Boost Venture Capital 

Outlook,” Adams Street, (May 2, 2023) available 

at https://www.adamsstreetpartners.com/insights/ 

long-term-trends-boost-venture-capital-outlook/. 

125 See Jay R. Ritter, supra note 122, at Table 4. The 

percentage of VC-backed IPOs has increased over 

time since 1980. 

126 See Alex Tuft and Emmanuel Yimfor, 

“Underwriter Closures: Implications for Venture 

Capital Firm Returns,” (June 15, 2023) at 1, 

available at https://papers.ssrn.com/sol3/papers. 

cfm?abstract_id=4414276. 

127 See Roberto Ragozzino and Dane P. Blevins, “An 

Investigation of the Attention Efects of Venture 

Capitalist Backing on Entrepreneurial Firms,” 

Long Range Planning Vol. 54(3), (Rev. Mar. 7, 

2023) at 5, available at https://papers.ssrn.com/ 

sol3/papers.cfm?abstract_id=4357858. 

128 See Alex Tuft and Emmanuel Yimfor, supra note 

126, at 14. 

129 Id. at 13, 59. 

130 Id. at 3, 19. 

131 Data on U.S. listed domestic frms comes from 

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 

Classifcation (SIC) codes 6722, 6726, 6798, and 

6799). A company with several classes of shares 

is counted once. Data for 2023 represents the 

number of listed frms and market capitalization as 

of June 30, 2023. 

132 See Mark J. Roe and Charles C.Y. Wang, “Are 

Public Firms Disappearing? Corporate Law and 

Market Power Analyses,” (Feb. 27, 2023) at 22, 

available at https://papers.ssrn.com/sol3/papers. 

cfm?abstract_id=4372070. Study measures 

through 2021. 

133 See Michael Ewens, et al., “Regulatory Costs 

of Being Public: Evidence from Bunching 

Estimation,” (Oct. 7, 2023) at 34, available at 

https://papers.ssrn.com/sol3/papers.cfm?abstract_ 

id=3740722. In each of the non-regulatory 

factors, additional cites were provided: decline 

in business dynamism (Decker et al., 2016), 

shifting investment to intangibles (Kahle and 

Stulz, 2017; Doidge, Kahle, Karolyi, and Stulz, 

2018), abundant private equity fnancing (Ewens 

and Farre-Mensa, 2020), changing economies of 

scale and scope (Gao, Ritter, and Zhu, 2013), and 

changing acquisition behavior (Gao, Ritter, and 

Zhu, 2013; Eckbo and Lithell, 2021). 

134 Data on U.S. listed domestic frms comes from 

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 

Classifcation (SIC) codes 6722, 6726, 6798, 

and 6799). Data for 1983 represents the market 

capitalization as of December 30, 1983. 

135 See Mark J. Roe and Charles C.Y. Wang, supra 

note 132, at 11. Study measures through 2021. 

136 Id. at 13. Study measures through 2021. In 1996, 

public companies’ profts were 4.5% of GDP that 

year. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 108 
137 Data on U.S. listed domestic frms comes from 

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 

Classifcation (SIC) codes 6722, 6726, 6798, and 

6799). A company with several classes of shares 

is counted once. Data for 2023 represents the 

number of listed frms and market capitalization as 

of June 30, 2023. 

138 The map included depicts 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, 

2022 through June 30, 2023. See supra note 57 for 

a description of how these amounts were reported 

or estimated. 

139 This data is based on DERA data. Small public 

companies include U.S. public companies with a 

market capitalization of less than or equal to $250 

million. Registered company data was collected 

from Intelligize database for public companies that 

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

U.S. territories. Records are from 10-K, 10-Q, 

20-F, 40-F, and their amendments that were fled 

between July 1, 2022 through June 30, 2023. 

Market capitalization information is as of June 

29, 2023. When applicable, missing market 

capitalization data was flled in with Bloomberg 

frst, CRSP, and then Capital IQ when available 

based on ticker-CUSIP information from WRDS. 

All the records with missing exchange information 

from Intelligize were treated as delisted from 

any market and hence were excluded from the 

estimates. Asset-backed issuers were also excluded. 

Public company issuers in industries outside of 

these top industries accounted for an additional 

975 issuers, including 417 small public companies 

and 558 large public companies, in the twelve 

months ended June 30, 2023. Oferings by 

pooled funds, including SPACs, accounted for an 

additional 402 issuers, including 265 small public 

companies and 137 large public companies, in the 

twelve months ended June 30, 2023. 

140 See https://www.sec.gov/education/capitalraising/ 

building-blocks/what-does-it-mean-be-a-publiccompany for more information. 

141 See Jason Paltrowitz, “Lawful But Awful: The 

Small Cap IPO Cycle,” OTC Markets, (Sept. 

21, 2023) available at https://blog.otcmarkets. 

com/2023/09/21/lawful-but-awful-the-small-capipo-cycle/. 

142 See Akhilesh Ganti, “Reverse Stock Split: What It 

Is, How It Works, and Examples,” Investopedia, 

(Updated Oct. 13, 2023) available at https://www. 

Investopedia.com/terms/r/reversesplit.asp. 

143 See Xia (Summer) Liu, et al., “Who Loses Most 

When Big Banks Suddenly Fail? Evidence From 

Silicon Valley Bank Collapse,” (Sept. 23, 2023) at 

2, 4, 6, 8, available at https://papers.ssrn.com/sol3/ 

papers.cfm?abstract_id=4443827. The sample in 

this study is composed of 137 SVB depositors with 

an average market cap of $365M and 251 SVB 

borrowers with an average market cap of $346M. 

See also Lewis Krauskopf, “Wall St Week Ahead 

Amid banking woes, faltering US small-caps ofer 

ominous economic sign,” Reuters, (May 14, 2023) 

available at https://www.Reuters.com/markets/us/ 

wall-st-week-ahead-amid-banking-woes-falteringus-small-caps-ofer-ominous-2023-05-12/. https:// 

www.fastcompany.com/90864553/silicon-valleybank-public-companies. 

144 This graphic is based on DERA data. Registered 

ofering data includes IPOs and registered 

secondary equity oferings and was collected from 

Thomson Financial’s SDC Platinum database. 

Registered debt oferings 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 ofering, calculated by 

multiplying price of the company’s stock at the 

close of the day of the ofering by the number of 

outstanding shares on the day of the ofering. Data 

from CRSP, Dealogic, and Compustat were used 

to fll in missing information from SDC Platinum. 

Those companies missing a stock price on the 

ofering day or 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 ofering as 

provided in the above-listed databases. There have 

been signifcant downward revisions in the most 

recent estimates as the market capitalization of 

issuers were corrected in the databases. 

145 See Noemi Distefano, “Targeting new investors 

top priority at small caps,” IR Magazine, (Aug. 25, 

2023) available at https://www.irmagazine.com/ 

small-cap/targeting-new-investors-top-prioritysmall-caps. 

146 See supra note 144 for a description of the 

methodology used to estimate registered equity 

oferings by small public companies. This graphic 

includes the top industries based on the total 

proceeds raised in registered equity oferings 

by small public companies during one of the 

respective periods, excluding oferings fled by 

pooled funds. Oferings for industries outside of 

these top industries accounted for approximately 

$514 million and $274 million in the twelve 

months ended June 30, 2022 and June 30, 2023, 

respectively. Oferings by pooled funds, including 

SPACs, accounted for approximately $18 billion 

and $1.6 billion in the twelve months ended June 

30, 2022 and June 30, 2023, respectively. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 109 
147 See “Considering an IPO? First, understand the 

costs,” PwC, (accessed Nov. 16, 2023) available 

at https://www.pwc.com/us/en/services/consulting/ 

deals/library/cost-of-an-ipo.html. 

148 See Michael Ewens, et al., supra note 133, at 5. 

149 Id. at 5, 25. 

150 See Noemi Distefano, supra note 145. 

151 Id. 

152 Id. 

153 See U.S. Small Business Administration Ofce of 

Advocacy, “Frequently Asked Questions About 

Small Business 2023,” supra note 4 at 4, Table 

1. Ownership includes demographic categories 

“Women” and “Equally women/men.” Women 

and Equally women/men owned 42.1% and 2.5% 

of total non-employer frms, respectively. 

154 Id. Ownership includes demographic categories 

“Women” and “Equally women/men.” Women 

and Equally women/men owned 21.7% and 

15.2% of total employer frms, respectively. 

155 See Kyle Stanford, et al., supra note 41. Data 

from Excel “Female Founder Activity” and “Deal 

Activity” tabs and includes women only and mixed 

teams. 

156 See U.S. Small Business Administration Ofce of 

Advocacy, “Frequently Asked Questions About 

Small Business 2023,” supra note 4, at 3. Data 

is presented for the 2017-2019 two-year survival 

rate for young employer establishments (refecting 

2-3-year-old frms surviving to at least 4-5 years 

old). 

157 See United States Census Bureau, “Annual 

Business Survey: Business Characteristics of 

Respondent Employer Firms by Sector, Sex, 

Ethnicity, Race, and Veteran Status for the 

U.S., States, and Metro Areas: 2020) (accessed 

Dec. 9, 2023) available at https://data.census. 

gov/table?q=ab2000*&tid=ABSCB2020. 

AB2000CSCB01&hidePreview=true&nkd= 

QDESC~B01. Data collected on July 31, 2023. 

Note: Business ownership is defned as having 51 

percent or more of the stock or equity in the 

business. Data are provided for frms owned 

equally (50% /50%) by men and women, by 

Hispanics and non-Hispanics, by minorities and 

non-minorities, and by veterans and nonveterans. 

Firms not classifable by sex, ethnicity, race, 

or veteran status are counted and tabulated 

separately. The individual amounts may not 

sum to the total or subtotal because a Hispanic 

frm may be of any race, because a frm could 

be tabulated in more than one racial group, or 

because the nonemployer frms data are rounded. 

158 See January Ventures, “2022 Early Stage 

Founder Sentiment Report,” (2023) at 6, 

available at https://www.january.ventures/_fles/ 

ugd/8d7061_91af48de61594b99b1006d37a 

f09900.pdf. 

159 See Babson College, supra note 7, at 49. 

160 See Nasdaq Entrepreneurial Center, ”Pay 

Ownership Valuation Inequalities,” (Apr. 12, 

2013) available at https://thecenter.nasdaq.org/ 

pov/. 

161 See January Ventures, supra note 158, at 7. 

162 Id. at 6. 

163 See McKinsey & Company, “Women in the 

Workplace 2022,” (Oct. 18, 2022) at 18, available 

at https://wiw-report.s3.amazonaws.com/ 

Women_in_the_Workplace_2022.pdf; see also Arti 

Raman, “Look Past Today’s Metrics To Celebrate 

The Growth of Female Founders,” Forbes, (Dec. 

13, 2022) available at https://www.Forbes.com/ 

sites/Forbestechcouncil/2022/12/13/look-pasttodays-metrics-to-celebrate-the-growth-of-femalefounders/?sh=661e57e473f3; Kelly Hyman, “Why 

Women Are More Likely to Experience Burnout 

(and 6 Ways to Prevent It from Happening,” 

Entrepreneur, (Nov. 2, 2022) available at https:// 

www.entrepreneur.com/leadership/why-womenare-more-likely-to-experience-burnout-and-howto/437561#; Claire Cain Miller, “Why Unpaid 

Labor Is More Likely to Hurt Women’s Mental 

Health Than Men’s,” The New York Times, 

(Sept. 30, 2022) available at https://www.nytimes. 

com/2022/09/30/upshot/women-mental-healthlabor.html. 

164 See January Ventures, supra note 158, at 7. 

165 See National Women’s Business Council, 

“2022 Annual Report,” (Dec. 20, 2022) at 8, 

available at https://www.nwbc.gov/wp-content/ 

uploads/2022/12/NWBC-2022-Annual-Report. 

pdf. 

166 See Nasdaq Entrepreneurial Center, “Lived 

Experience Action Research For Women 

Entrepreneurs. Fair Pay, Ownership & Valuation 

Research. Year Two Findings,” (Apr. 12, 2023) at 

8, 14, 28, available at https://thecenter.nasdaq.org/ 

lived-experiences/. 

167 See Jefrey Sohl, supra note 27. 

168 Id. at 1. 

169 Id. 

170 See Kyle Stanford, et al., supra note 41. Data 

from Excel “Female Founder Activity” and “Deal 

Activity” tabs. Founder groups are mutually 

exclusive. Deals with men and women cofounders 

are calculated by subtracting “US VC deal activity 

for companies with all-female founding team” 

from “US VC deal activity in companies with at 

least one female founder.” Deals with men-only 

founders are calculated by subtracting “US VC 

deal activity in companies with at least one female 

founder” from “US VC deal activity.” 

171 Id. Data from Excel “Female Founder Activity” 

and “Deal Activity” tabs. 

172 The percentage of Latina and Black women 

founders is based on 2022 data through September 

30, 2022. See Digital Undivided, “Project Diane 

2022. Latina and Black Women Entrepreneurs in 

the Tech and Innovation Ecosystem,” (Mar. 2023) 

at 16, available at https://static1.squarespace. 

com/static/5e2613fbf9e62c2c012e80e3/t/64 

08c157e8bbef6084a8fa4d/1678295436903/ 

ProjectDiane2022-08.03.pdf. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 110 
173 See Kyle Stanford, et al., supra note 41. Data from 

Excel “Female Founder Activity,” “Deal Activity,” 

“Angel & Seed Activity,” “Early Stage Activity,” 

“Late Stage Activity,” and “Venture Growth 

Activity” tabs. Founder groups are mutually 

exclusive. Deals with men and women cofounders 

are calculated by subtracting “US VC deal activity 

for companies with all-female founding team” 

from “US VC deal activity in companies with at 

least one female founder.” Deals with men-only 

founders are calculated by subtracting “US VC 

deal activity in companies with at least one female 

founder” from “US VC deal activity.” Venture 

Growth includes Series E+ or deals involving 

companies that are at least seven years old and 

have raised at least six VC rounds. See Kyle 

Stanford, supra note 93, at 7. 

174 See Dropbox DocSend, “The Funding Divide 

2023. Amid macro headwinds and increased 

investor diligence, familiar discrepancies reemerge,”(2023) at 2, available at https:// 

experience.dropbox.com/form/docsend/fundingdivide-report. 

175 Id. at 3. 

176 Id. 

177 Id. at 2, 4. 

178 Id. at 8, 9. 

179 See PitchBook, “All In. Female Founders in the 

US VC Ecosystem,” (Nov. 2, 2022) available at 

https://pitchbook.com/news/reports/2022-all-infemale-founders-in-the-us-vc-ecosystem. Data from 

Excel “VC exit activity” tab. 

180 See Female Founders Fund, “2022 Review 

of Funding for Female Founders. Female 

founders prove resilience in a tough market,” 

Medium, (Apr. 3, 2023) available at https://blog. 

femalefoundersfund.com/2022-review-of-fundingfor-female-founders-e928f8072655. See also 

Mature and Later Stage Businesses section of the 

Report above. 

181 See Community Member, “Venture Capital’s 

Double Standard: Being a Woman Founder 

With No Technical Experience,” Women on 

Business, (May 5, 2023) available at https:// 

www.womenonbusiness.com/venture-capitalsdouble-standard-being-a-woman-founder-with-notechnical-experience/. 

182 See Arti Raman, “Look Past Today’s Metrics To 

Celebrate The Growth of Female Founders,” 

Forbes, (Dec. 13, 2022) available at https://www. 

Forbes.com/sites/Forbestechcouncil/2022/12/13/ 

look-past-todays-metrics-to-celebrate-the-growthof-female-founders/?sh=661e57e473f3. 

183 See McKinsey & Company, “Women in the 

Workplace 2022,” (Oct. 18, 2022) at 8, available 

at https://wiw-report.s3.amazonaws.com/Women_ 

in_the_Workplace_2022.pdf; See also Shortlister, 

“Women in Leadership Statistics in 2023: Where 

We Are & Where We Need to Go,” available at 

https://www.myshortlister.com/insights/women-inleadership-statisticshttps://www.myshortlister.com/ 

insights/women-in-leadership-statistics; See also 

Carta, “2022 Annual Equity Report. Demographic 

analysis of ownership in the private markets,” 

(2022) at 27, available at https://carta.com/equityreport/2022/. 

184 See Carta, supra note 183, at 37. Asian American 

includes East Asian (2% women and 9% men) and 

South Asian (1% women and 5% men). Other 

includes Native American, Pacifc Islander, Middle 

Eastern, and multi-race. 

185 See Ann Shepherd, “Him For Her And 

Crunchbase 2022 Study of Gender Diversity on 

Private Company Boards,” Crunchbase, (Mar. 

29, 2023) available at https://news.crunchbase. 

com/diversity/2022-gender-study-private-boards/; 

Ann Shepherd, “2021 Study of Gender Diversity 

on Private Company Boards,” (Mar. 29, 2022) 

available at https://news.crunchbase.com/business/ 

him-for-her-2021-diversity-study-private-companyboards/; Ann Shepherd and Gené Teare, “2020 

Study of Gender Diversity On Private Company 

Boards,” (Mar. 1, 2021) available at https://news. 

crunchbase.com/diversity/2020-diversity-study-onprivate-company-boards/. 

186 See Ann Shepherd, supra note 185. 

187 See Women CEOs in America 2022, “Changing 

the Face of Business Leadership,” at 33, 

available at https://www.wbcollaborative.org/ 

wp-content/uploads/2022/09/Women-CEOS-inAmerica_2022-0920221847.pdf. 

188 See Ann Shepherd, supra note 185. 

189 Id. See Women CEOs in America 2022, 

“Changing the Face of Business Leadership, supra 

note 187. 

190 See Ann Shepherd, supra note 185. 

191 See Paul Hodgson and Ramy Ibrahim, “Women 

Taking More Board Seats, But Progress Mixed,” 

ISS Corporate Solutions, (Apr. 18, 2023) at 6, 7, 8, 

Chart 10, available at https://www.iss-corporate. 

com/library/women-taking-more-board-seats-butprogress-mixed/. CEO totals calculated by the 

sum of industry CEOs; see also Women CEOs in 

America 2022, “Changing the Face of Business 

Leadership,” supra note 187, at 3. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 111 
192 See 50/50 Women on Boards, “2023 Gender 

Diversity Index Report. Annual Progress 

Report of Women Corporate Directors by 

Race & Ethnicity, Company Size, State, and 

Sector in the U.S.,” (Sept. 18, 2023) at 11-12, 

available at https://5050wob.com/wp-content/ 

uploads/2023/09/2023-GDI-Annual-Report.pdf. 

193 See Jackie Cook, “Women Make Progress on 

Corporate Boards, but C-Suite Gains Are Scant,” 

Morningstar, (Mar. 3, 2023) available at https:// 

www.morningstar.com/sustainable-investing/ 

women-make-progress-corporate-boards-csuite-gains-are-scant (citing Corinne Post, et al., 

“Research: Adding Women to the C-Suite Changes 

How Companies Think,” (Apr. 6, 2021) available 

at https://hbr.org/2021/04/research-adding-womento-the-c-suite-changes-how-companies-think. 

194 See 50/50 Women on Boards, supra note 192, at 3, 

4, 6. 

195 See Jefrey Sohl, supra note 27, at 1. 

196 See National Women’s Business Council, supra 

note 165, at 10. 

197 See Deloitte, Venture Forward and NVCA, “VC 

Human Capital Survey, Fourth edition,” (Apr. 

2023) at 14, available at https://www2.deloitte. 

com/us/en/pages/audit/articles/diversity-venturecapital-human-capital-survey.html. Investment 

partners is defned as employees with the titles 

of managing general partner, managing partner, 

general partner, founding partner, or managing 

director or were partners who were designated 

as senior-level employees; and as investment 

professionals with senior decision-making 

responsibilities. See also First Republic, “The 

State of Gender Compensation in Venture 2022,” 

(Nov. 28, 2022) at 10, available at https://www. 

frstrepublic.com/-/media/frb/documents/pdfs/ 

innovators/women-in-venture-compensationsurvey-report.pdf (tracking female or non-binary). 

198 See Venture Capital Journal, “The shape of things 

to come. Meet the women infuencing the future 

of venture capital,” (July/Aug. 2023) at 26-27, 

available at https://www.venturecapitaljournal. 

com/download-the-july-august-2023-issue-ofventure-capital-journal/. 

199 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 14. 

200 See Fairview Capital, “2022 Market Review. 

Women and Minority-Owned Private Equity 

and Venture Capital Firms, (Mar. 14, 2023) 

at 14, available at https://fairview.cdn.prismic. 

io/fairview/86d13451-04d8-4b01-a13d0e102d637dcb_Fairview+-+2022+Market+Review 

+of+Woman+and+Minority-Owned+Firms.pdf.

201 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 13. 

202 See National Women’s Business Council, supra 

note 165, at 11; see also Sara Silano, “Women 

Founders Get 2% of Venture Capital Funding 

in U.S.,” Morningstar, (Mar. 6, 2023) available 

at https://www.morningstar.com/alternativeinvestments/women-founders-get-2-venturecapital-funding-us; Isabelle Solal and Kaisa 

Snellman, “For Female Founders, Fundraising 

Only from Female VCs Comes at a Cost,” 

Harvard Business Review, (Feb. 1, 2023) available 

at https://hbr.org/2023/02/for-female-foundersonly-fundraising-from-female-vcs-comes-at-a-cost. 

203 See Fairview Capital, “Perspectives on Diverse 

and Emerging Manager Investing In Venture 

Capital and Private Equity,” (Sept. 19, 2023) at 

21, available at https://www.sec.gov/fles/quayefairview-capital-presentation.pdf; Fairview Capital, 

supra note 200, at 15. 

204 See Fairview Capital, supra note 203, at 21. 

205 In prior years’ reports, this section has referred 

to “Minority-Owned Businesses.” The word 

“minority” tracks the language of the SEC Small 

Business Advocacy Act of 2016, which states 

that a function of the ofce shall be to “identify 

problems that small businesses have with securing 

access to capital, including any unique challenges 

to minority-owned small businesses, womenowned small businesses, and small businesses 

afected by hurricanes or other natural disasters.” 

This year, based on feedback we have received, 

rather than use the word “minority,” we instead 

use “diverse” or, where applicable, refer to persons 

“of color.” Many have indicated that “the use of 

“minority” may be viewed pejoratively because it 

is usually equated with being less than, oppressed, 

or defcient in comparison with the majority.” See, 

e.g., American Psychological Association “BiasFree Language” available at https://apastyle.apa. 

org/style-grammar-guidelines/bias-free-language/ 

racial-ethnic-minorities. 

206 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 14. 

207 See Federal Reserve Banks, “2023 Report on 

Startup Firms Owned by People of Color. Findings 

from the 2022 Small Business Credit Survey,” 

(June 2023) at 2, available at https://www. 

fedsmallbusiness.org/survey/2023/frms-owned-bypeople-of-color. 

208 See Federal Reserve Banks, supra note 207, at 2; 

United States Census Bureau, “Current Population 

Survey,” (accessed Dec. 10, 2023) available at 

https://www.census.gov/programs-surveys/cps.html 

(Data from January 2020 - June 2023). 

209 See U.S. Senate Committee on Small Business & 

Entrepreneurship, “Minority Entrepreneurs,” 

(accessed Nov. 27, 2023) available at https:// 

www.sbc.senate.gov/public/index.cfm/ 

minorityentrepreneurs. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 112 
210 See Guidant Financial, “2023 Small Business 

Entrepreneurs of Color. A Look at the State of 

Entrepreneurs of Color in 2023,” (accessed Nov. 

27, 2023) available at https://www.guidantfnancial. 

com/small-business-trends/people-of-color-businesstrends/. 

211 See Babson College, supra note 7, at 64. 

212 Id. at 13. 

213 Id. at 64. 

214 See Carta, “Annual equity report 2022,” supra 

note 183, at 39. Asian American includes both 

East Asian and South Asian populations. Other 

includes Native American, Pacifc Islander, Middle 

Eastern, and multiracial. 

215 See Robert W. Fairlie, “The Impacts of COVID-19 

on Racial Inequality in Business Earnings,” 

National Bureau of Economic Research, (Oct. 

2022) at 2, available at https://www.nber.org/ 

papers/w30532. 

216 Id. at 11. 

217 See Brendan Cosgrove, et al., supra note 1, at 14. 

218 See Board of Governors of the Federal Reserve 

System, “DFA: Distributional Financial Accounts,” 

(updated Sept. 22, 2023) available at https:// 

www.federalreserve.gov/releases/z1/dataviz/dfa/ 

distribute/table/#quarter:135;series:Net%20 

worth;demographic:race;population:all;units:levels. 

From data fle “Wealth by race”; see also Gloria 

Guzman and Melissa Kollar, “Income in the 

United States: 2022. Current Population Reports,” 

(Sept. 2023) at 4, Figure 2, available at https:// 

www.census.gov/content/dam/Census/library/ 

publications/2023/demo/p60-279.pdf. 

219 See, e.g., “Small and Emerging Businesses” 

section of this Report above, at 6-7. 

220 See Board of Governors of the Federal Reserve 

System, supra note 218. Other includes 

multiracial, Asian American/Pacifc Islander, and 

Native American/ Alaska Native. See also Anshu 

Siripurapu, “The U.S. Inequality Debate,” Council 

on Foreign Relations, (Apr. 20, 2022) available at 

https://www.cfr.org/backgrounder/us-inequalitydebate. 

221 See Ana Hernandez Kent and Lowell R. 

Ricketts, “The State of U.S. Wealth Inequality,” 

Federal Reserve Bank of St. Louis, (Oct. 18, 2023) 

available at https://www.stlouisfed.org/institute-foreconomic-equity/the-state-of-us-wealth-inequality. 

222 See Gloria Guzman and Melissa Kollar, supra note 

218, at 16-29. Each racial category is of that race 

individually and does not include people of that 

race that identify as Hispanic/Latino. Those that 

identify as Hispanic/Latino can also identity as any 

race. 

223 Id. at 19, 21, 23, 25, 27. Each racial category is of 

that race individually and does not include people 

of that race that identify as Hispanic/Latino. Those 

that identify as Hispanic/Latino can also identity as 

any race. 

224 See Federal Deposit Insurance Corporation (FDIC), 

“2021 FDIC National Survey of Unbanked and 

Underbanked Households,” (Oct. 2022) at 14-

15, available at https://www.fdic.gov/analysis/ 

household-survey/2021report.pdf. 

225 See Federal Reserve Banks, “2023 Report on 

Employer Firms: Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Race, ethnicity of owner(s)” tab, question 

“Best outcome across loan/LOC/merchant cash 

advance application(s). Race/ethnicity strata are 

non-Hispanic white, non-Hispanic Black or African 

American, non-Hispanic Asian, non-Hispanic 

Native American, and Hispanic. Gender strata are 

men-owned, equally owned, and women-owned. 

226 See Brendan Cosgrove, et al., supra note 1, at 9, 

15-16. 

227 Id. at 45. 

228 Id. at 48. 

229 See Jefrey Sohl, supra note 27, at 2; Jefrey Sohl, 

supra note 33, at 3. 

230 See Jefrey Sohl, supra note 27, at 1; Jefrey Sohl, 

supra note 33, at 3. 

231 See Morgan Stanley, “Investing in Diverse Startups: 

A Reassessment,” (Dec. 27, 2022) available at 

https://www.morganstanley.com/ideas/vc-fundingdiverse-startups-2022-survey. 

232 See Dropbox Docsend, supra note 174, at 11. 

233 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 8. 

234 See Dropbox Docsend, supra note 174, at 2. 

235 See Lisa D. Cook, et al.,“Funding Black HighGrowth Startups,” National Bureau of Economic 

Research, (Nov. 2022) at 5, available at https:// 

www.nber.org/system/fles/working_papers/ 

w30682/w30682.pdf. 

236 See Amber Quiñones & Drew Silverman, “The 

State of Seed Stage Funding to Underrepresented 

Founders,” Medium, (Aug. 22, 2023) available at 

https://Medium.com/bbg-ventures/seed-fundingto-underrepresented-founders-11d8ae144a48#. 

Diversity Investments are defned as investments 

that have been made into companies in 

Crunchbase’s Diversity Spotlight category. Diversity 

Spotlight refects the types of diversity represented 

in an organization’s leadership team. Crunchbase 

has partnered with other entities to collect diversity 

data and has encouraged companies and investors 

to self-identify diversity data. See more information 

at https://about.crunchbase.com/blog/newcrunchbase-diversity-spotlight/. 

237 See Harlem Capital, “1Q23 U.S. Diverse 

Fundraising Insights,” (Apr. 2023) at slide 3, 

available at https://harlem.capital/wp-content/ 

uploads/2023/04/1Q23-Diverse-FundraisingInsights_v2.pdf. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 113 
 

238 See Chris Metinko, “Special Series: VC Dollars 

To Black Startup Founders Fell More Than 50% 

In 2022,” Crunchbase News, (Feb. 22, 2023) 

available at https://news.crunchbase.com/diversity/ 

venture-funding-black-startups-2022/; 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-latine-founded-companiesfunding-falls/. 

239 See Gené Teare, supra note 238. 2022 data is 

through September 30, 2022. 

240 See Chris Metinko, supra note 238. 

241 See Lian Chang, “Employees, founders, and 

investors by race and ethnicity,” Carta, (Feb. 9, 

2023) available at https://carta.com/blog/employeesfounders-investors-race-ethnicity/. 

242 See Paul Hodgson, et al., “ISS Discusses Russell 

3000 Boards Becoming More Diverse,” The 

CLS Blue Sky Blog, (Mar. 1, 2023) available at 

https://clsbluesky.law.columbia.edu/2023/03/01/ 

iss-discusses-russell-3000-boards-becoming-morediverse/. 

243 Id. 

244 See Jefrey Sohl, supra note 27, at 1. See Jefrey 

Sohl, supra note 33, at 3. 

245 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 11, 19, 20, 21, 25. Values may not 

sum to 100% due to rounding and overlapping 

racial and ethnic identifcations. 

246 See Lian Chang, supra note 241. The category 

“Asian American” is a combination of “East 

Asian” and “South Asian.” Native Hawaiians and 

Pacifc Islanders are included in “Other,” alongside 

people of Indigenous American, Middle Eastern, 

and mixed backgrounds. 

247 See Deloitte, Venture Forward and NVCA, supra 

note 197 at 19-20, 25, 31. 

248 See BLCK VC, “State of Black Venture Report. 

A comprehensive study of the Black venture 

ecosystem,” (2023) at 16, available at https://www. 

blckvc.org/sbvr2023. 

249 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 9; BLCK VC, supra note 248, at 

10-11. 

250 See Amber Quiñones & Drew Silverman, supra 

note 236. 

251 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 9. 

252 Id. at 30. 

253 Id. 

254 See Morgan Stanley, supra note 231. 

255 Id. 

256 See Hello Alice, “The LGBTQ+ Economy. A Closer 

Look at the Trends and Triumphs of New Majority 

Small Business Owners in 2022,” (June 2022) at 

12, available at https://helloalice.com/wp-content/ 

uploads/2022/06/LGBTQ-Economy-Report_ 

Update.pdf. 

257 Id. at 11. 

258 See Federal Reserve Banks, “2023 Report 

on Employer Firms: Findings from the 2022 

Small Business Credit Survey,” supra note 9. 

Data from Excel “LGBTQ+ ownership” tab, 

question “Actions taken in response to fnancial 

challenges.” 

259 See Spencer Watson, et al., “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/LGBTQ-Owned-Small-Businessesin-2021-July-2022.pdf. 

260 See Spencer Watson, et al., “The LGBTQI+ 

Economic and Financial (LEAF) Survey. 

Understanding the Financial Lives of LGBTQI+ 

People in the United States,” (Mar. 6, 2023) at 12, 

available at https://lgbtq-economics.org/wpcontent/uploads/2023/03/LEAF-Survey-ReportMarch-2023.pdf. 

261 See StartOut, “2023 State of LGBTQ+ 

Entrepreneurship Report,” (Sept. 26, 2023) at 

2, available at https://startout.org/wp-content/ 

uploads/2023/09/2023-State-of-LGBTQEntrepreneurship-Report.pdf. 

262 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “LGBTQ+ ownership” tab, question “Equity 

investments.” 

263 See StartOut, supra note 261, at 2. 

264 Id. 

265 Id. Startups raised at least $250K in funding 

between 2000-2022. 

266 See Morgan Stanley, “Broadening the Spectrum of 

Investing: Opportunities and Demand for Investing 

in LGBTQ+ Equity & Inclusion,” (June 2023) at 

2, available at https://www.morganstanley.com/ 

content/dam/msdotcom/en/assets/pdfs/Morgan_ 

Stanley_Broadening_the_Spectrum_of_Investing_ 

LGBTQ_Investing.pdf. 

267 See Diego Mariscal, “Entrepreneurship is a 

pathway for founders with disabilities to address 

wealth and employment gaps,” Kaufman 

Foundation, (Oct. 26, 2022) available at https:// 

www.kaufman.org/currents/2gether-internationalentrepreneurs-with-disabilities/. 

268 See United States Census Bureau, “American 

Community Survey,” (accessed Nov. 30, 2023) at 

Table S1810: Disability Characteristics, available at 

https://data.census.gov/table?q=S1810. 

269 See U.S. Bureau of Labor Statistics, “Economic 

News Release. Persons with a Disability: Labor 

Force Characteristics Summary,” (Feb. 23, 2023) 

available at https://www.bls.gov/news.release/disabl. 

nr0.htm. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 114 
270 See United States Census Bureau data (accessed 

Dec. 10, 2023) available at https://data.census.gov/ 

mdat/#/search?ds=ACSPUMS1Y2022&cv=DIS& 

rv=COW&wt=PWGTP. Small Businesses include 

“Self-employed in own not incorporated business, 

professional practice, or farm” and “Self-employed 

in own incorporated businesses, professional 

practice or farm.” See U.S. Small Business 

Administration Ofce of Advocacy, supra note 4. 

271 See John Kitching, “Entrepreneurship and SelfEmployment by People with Disabilities,” OECD 

Project on Inclusive Entrepreneurship, (Oct. 4, 

2023) at 8, available at https://www.oecd.org/ 

cfe/leed/background-report-people-disabilities. 

pdf; National Disability Institute, “Small Business 

Ownership by People with Disabilities. Challenges 

and Opportunities,” (Apr. 2022) available at 

https://www.nationaldisabilityinstitute.org/ 

wp-content/uploads/2022/07/ndi-small-businessresearch-report.pdf; Diego Marsical, supra note 267. 

272 See Federal Reserve, “Economic Well-Being of U.S. 

Households in 2022,” (May 2023) at 39, available 

at https://www.federalreserve.gov/publications/ 

fles/2022-report-economic-well-being-ushouseholds-202305.pdf. 

273 See Access2funding!, “Transforming Opportunities 

& Outcomes for Disabled Entrepreneurs,” 

available at https://static1.squarespace.com/ 

static/619e1d7a522f9748f55d6a17/t/638b7007b3b 

4ae3a0159b28e/1670082578331/Access2Funding. 

pdf. Note this data is a survey of entrepreneurs who 

are disabled the United Kingdom. 

274 See National Disability Institute, “Small Business 

Ownership by People with Disabilities. Challenges 

and Opportunities,” supra note 271, at 17. 

275 Id. at 23. 

276 Id. at 19. 

277 See United States Census Bureau, “2019 Annual 

Business Survey,” available at https://data.census. 

gov/table?q=ab1900*&tid=ABSNESD2019. 

AB1900NESD01&nkd=YEAR~2019. Collected 

6/27/2023. Business ownership is defned as having 

51 percent or more of the stock or equity in the 

business. 

278 Id. Collected 6/27/2023. Business ownership is 

defned as having 51 percent or more of the stock 

or equity in the business. Veteran business owners 

employ roughly 3,966,417 people. 

279 See D’Aniello Institute for Veterans & Military 

Families, “2021 National Survey of MilitaryAfliated Entrepreneurs,” (Apr. 2022) at 44, 50, 

available at https://ivmf.syracuse.edu/wp-content/ 

uploads/2022/05/2021-National-Survey-ofMilitary-Afliated-Entrepreneurs-Research-Report-

_FINAL-FINAL-ua.pdf; D’Aniello Institute for 

Veterans & Military Families, “2022 National 

Survey of Military-Afliated Entrepreneurs,” 

(Mar. 2023) available at https://surface.syr.edu/cgi/ 

viewcontent.cgi?article=1405&context=ivmf&_ 

gl=1*606i44*_ga*OTEyMzMxMzg3LjE2OTkw 

NDIwMjQ.*_ga_QT13NN6N9S*MTY5OTA0Mj 

AyNC4xLjEuMTY5OTA0MzM4NS4xOC4wLjA. 

280 See D’Aniello Institute for Veterans & Military 

Families, “2021 National Survey of MilitaryAfliated Entrepreneurs,” supra note 279, at 60. 

281 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Veteran ownership” tab, question “Equity 

investments.” 

282 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 27. 

283 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Employer frms” tab, question “Natural 

disaster related losses”; Federal Reserve Banks, 

“Small Business Credit Survey. 2022 Report on 

Employer Firms,” supra note 9. Data from Excel 

“Employer frms” tab, question “Natural disasterrelated losses”. 

284 This statistic is based on a Federal Reserve 

sample of small businesses in New York, New 

Jersey, and Connecticut. See Asani Sarkar, 

“Small Business Recovery after Natural 

Disasters in the Fed’s Second District,” 

(Nov. 16, 2023) available at https:// 

libertystreeteconomics.newyorkfed.org/2023/11/ 

small-business-recovery-after-natural-disasters-inthe-feds-second-district/. 

285 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Race, ethnicity of owner(s) tab”, question 

“Natural disaster related losses.” 

286 See https://www.ncdc.noaa.gov/billions/; see also 

https://www.ncei.noaa.gov/access/billions/events. 

Note that NOAA tracks events on a calendar basis, 

and we have combined natural disaster events that 

straddle calendar years. 

287 During the time period October 1, 2022 through 

September 30, 2023. See https://www.ncei.noaa. 

gov/access/billions/events. 

288 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Disaster-impacted frms” tab, question 

“Actions taken in response to fnancial challenges” 

for frms that “Sufered natural disaster-related 

losses.” 

289 Id. Data from Excel “Disaster-impacted frms” tab, 

question “Share of fnancing applicants that sought 

an equity investment” for frms that “Sufered 

natural disaster-related losses.” 

290 See Asani Sarkar, supra note 284. 

291 Data from the 2020 5-year American Community 

Survey (ACS) was used by DERA to estimate the 

population in zip codes afected by the natural 

disasters as described in infra note 292. However, 

certain zip codes were identifed as missing 

population values, so the percentage is likely 

underestimated. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 115 
292 This graphic is based on DERA data. Evaluated 

from July 1, 2020 to June 30, 2023 using zip codes 

afected by natural disasters, excluding COVID-19 

Pandemic. Zip codes designated as afected are 

defned as having one or more residents approved 

for housing assistance under FEMA’s IHP program 

for natural disasters with classifcations of Major 

Disaster Declaration and incident start dates 

between July 1, 2020 and June 30, 2023, updated 

on September 15, 2023. The classifcation method 

for disaster areas is based on the methodology in 

the “2017 Small Business Credit Survey – Report 

on Disaster-Afected Firms,” Federal Reserve 

Banks of Dallas, New York, Richmond, and San 

Francisco, available at https://www.newyorkfed. 

org/medialibrary/media/smallbusiness/2017/SBCSReport-on-Disaster-Afected-Firms.pdf. 

293 Based on DERA data between July 1, 2020 

through June 30, 2023 using zip codes afected 

by natural disasters as described in supra note 

292 for oferings conducted under Regulation 

D, Regulation A, and Regulation Crowdfunding 

and registered equity oferings by small public 

companies. See note 57 for a description of the 

methodology used to estimate these oferings and 

issuers and capital raised. Small public companies 

include U.S. public companies with a size less 

than or equal to $250 million on the date of the 

ofering, calculated by multiplying price of the 

company’s stock at the close of the day of the 

ofering by the number of outstanding shares on 

the day of the ofering. See supra note 144 for a 

description of how these amounts were estimated. 

294 Id. 

295 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Geography” tab, question “Number of 

employees” for “rural” frms.” 

296 See Daniel Wilmoth, PhD, “Small Business Facts. 

Small Businesses in Rural Areas,” U.S. Small 

Business Administration Ofce of Advocacy, 

(Aug. 2023) available at https://advocacy.sba.gov/ 

wp-content/uploads/2023/08/Fact-Sheet-SmallBusiness-in-Rural-Areas-508c.pdf. 

297 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. 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 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 data is 

from data appendix Excel “Census Division” tab 

column “Geography.” The aggregate percentages 

of the Small Businesses in the Region will not 

total 100%. 

298 See Main Street Americas, “Entrepreneurial 

Ecosystems,” (accessed Dec. 11, 2023) available 

at https://www.mainstreet.org/howwecanhelp/ 

resourcecenter/entrepreneurialecosystems; See also 

Main Street America, “Announcing the Equitable 

Entrepreneurial Ecosystems for Rural Main Streets 

Program Grantees,” (Mar. 27, 2023) available at 

https://www.mainstreet.org/blogs/national-mainstreet-center/2023/03/27/announcing-the-equitableentrepreneurial-ecosystem. 

299 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data from 

Excel “Geography” tab, question “Financial 

Services Provider” for “rural” frms. 

300 See Consumer Financial Protection Bureau, “CFPB 

Releases Report on Financial Challenges Facing 

Rural Communities. Many rural communities 

are “banking deserts,” (Apr. 19, 2022) available 

at https://www.consumerfnance.gov/about-us/ 

newsroom/cfpb-releases-report-on-fnancialchallenges-facing-rural-communities/. 

301 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9. Data 

from Excel “Geography” tab, question “Equity 

investments. The overall percentage of small 

businesses seeking external capital that sought 

equity fnancing was 4% in 2022 and 6% in 2021. 

See Federal Reserve Banks, “Small Business Credit 

Survey. 2021 Report on Employer Firms,” (2021) 

available at https://www.fedsmallbusiness.org/ 

survey/2021/report-on-employer-frms. Data from 

Excel “Geography” tab, question “Financing and 

credit products sought.” 

302 See Federal Reserve Banks, “Small Business 

Credit Survey. 2022 Report on Employer Firms,” 

supra note 9. Data from Excel “Geography” tab, 

question “Type of fnancing applied for.” 

303 See U.S. Securities and Exchange Commission, 

“Accessing the Public Markets: Becoming and 

Staying a Public Reporting Company,” (accessed 

Dec. 5, 2023) available at https://www.youtube. 

com/watch?v=wqekOFREtFM&t=1816s (starting 

at 30:50). 

304 Data from the 2020 5-year American Community 

Survey (ACS) was used by DERA to estimate 

the population in zip codes in rural areas. 

Classifcation of rural areas are based on the 

updated list of 2023 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. 

305 See Federal Reserve Banks, “2023 Report on 

Employer Firms. Findings from the 2022 Small 

Business Credit Survey,” supra note 9, at 24. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 116 
306 Based on DERA data between July 1, 2020 

through June 30, 2023 for oferings conducted 

under Regulation D, Regulation A, and Regulation 

Crowdfunding and registered equity oferings by 

small public companies. Classifcation 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 304. See note 57 for a description of 

the methodology used to estimate these oferings 

and issuers and capital raised. Small public 

companies include U.S. public companies with a 

size less than or equal to $250 million on the date 

of the ofering, calculated by multiplying price of 

the company’s stock at the close of the day of the 

ofering by the number of outstanding shares on 

the day of the ofering. See supra note 144 for a 

description of how these amounts were estimated. 

307 Id. 

308 See, e.g., “Diverse Founders and Investors” section 

of the Report above, at 50. 

309 See, e.g., “Women Business Owners and Investors” 

section of the Report above, at 40, 45-46, and 

48 and “Diverse Business Owners and Investors” 

section of the Report above, at 54 and 58. 

310 See, e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 14-16. 

311 See e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 6. 

312 See e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 8. 

313 See, e.g., “Women Founders and Investors” section 

of this Report above, at 42-43 and “Diverse 

Founders and Investors” section of the Report 

above, at 56. 

314 See, e.g., “Women Founders and Investors” section 

of this Report above, at 42 and “Diverse Founders 

and Investors” section of the Report above, at 56. 

315 See, e.g., “Diverse Founders and Investors” section 

of the Report above, at 59; Ofce of the Advocate 

for Small Business Capital Formation Annual 

Report Fiscal Year 2022, supra note 54, Minority 

Business Owners and Investors” section at 60. 

316 See What is the role of accredited investors?, 

available at https://www.sec.gov/education/ 

capitalraising/building-blocks/accredited-investor. 

317 See, e.g., “Diverse Founders and Investors” section 

of the Report above, at 52. 

318 Id. at 58. 

319 Id. at 52. 

320 Id. at 53-54. 

321 See e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 17; “Ofce of the Advocate for Small 

Business Capital Formation Annual Report Fiscal 

Year 2022,” supra note 54, Small and Emerging 

Businesses” section, at 18. 

322 See, e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 17-18. 

323 See Transcript of the SEC 42nd Annual Small 

Business Forum, Exploring the Early-Stage 

Landscape: Trends and Strategies in Capital 

Raising, (Apr. 24, 2023) at 50-51, available at 

https://www.sec.gov/fles/day-1-exploring-earlystage-landscape.pdf. 

324 See Ofce of Information and Regulatory Afairs, 

Ofce of Management and Budget, U.S. Securities 

and Exchange Commission Agency Rule List 

(Fall 2023), at https://www.reginfo.gov/public/do/ 

eAgendaMain?operation=OPERATION_GET_ 

AGENCY_RULE_LIST¤tPub=true& 

agencyCode=&showStage=active&agencyCd= 

3235&csrf_token=A318F164A593D6D0B87610 

68BB1EB5F44622C83C4E9F63A49E48568CA4 

2DF3EC3626E2D98EBE774CCEBB3B6BA96D 

FA0ED95E. 

325 See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Pub. L. No. 111-203, 

124 Stat. 1376 (2010) available at https://www. 

govinfo.gov/app/details/PLAW-111publ20. 

326 See, e.g., Ofce of the Advocate for Small Business 

Capital Formation Annual Report Fiscal Year 

2022, supra note 54, “Recommendations” section 

at 73. 

327 For example, discussions about the private 

market should separately assess use by operating 

companies and by pooled funds given the 

diferences in those two markets. 

328 See “Small and Emerging Businesses and Exempt 

Ofering Data” section of this report above at 

19; see also page 16 for the share raised by U.S. 

companies (excluding pooled funds). 

329 Based on DERA data. See supra note 57 for a 

description of how these amounts were estimated. 

This number includes $2.0 trillion raised by pooled 

funds that indicated that they were excluded 

from the Investment Company Act under Section 

3(c)(7) as well as $359 billion raised by funds 

that indicated that they were excluded from the 

Investment Company Act under Section 3(c)(7) 

and Section 3(c)(1). 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 117 
 

330 3(c)(7) funds are limited to “qualifed purchasers,” 

investors who must meet fnancial and 

sophistication standards that are much higher 

than those in the accredited investor defnition. 

See https://www.sec.gov/education/glossary/ 

jargon-z#QP. For example, an individual may be a 

qualifed purchaser if the investor owns $5 million 

or more in investments, and an entity may qualify 

if it owns and invests on a discretionary basis at 

least $25 million in investments. For more detail 

on 3(c)(7) and 3(c)(1) funds, See How do private 

funds provide capital to early-stage companies?, 

available at https://www.sec.gov/education/ 

capitalraising/building-blocks/private-fund. 

331 Based on DERA data. See supra note 57 for a 

description of how these amounts were estimated. 

In addition to the $130 billion raised by 3(c)(1) 

funds and $2.3 trillion raised by 3(c)(7) funds, 

an additional $118 billion was raised by other 

private funds. 

332 See, e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 14. While Section 4(a)(2) of the 

Securities Act is not separately estimated within 

“Other Exempt Ofering” estimates, it is our 

understanding that many Rule 144A oferings are 

initially done under Section 4(a)(2) or Regulation 

S, neither of which have an associated fling with 

the Commission. 

333 See, e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 19. 

334 See, e.g., Letter from the SEC Small Business 

Advisory Committee to Chair Gary Gensler 

(Mar. 12, 2022) available at https://www.sec. 

gov/spotlight/sbcfac/sbcfac-accredited-investorrecommendation-021022.pdf; Transcript of 

the Small Business Capital Formation Advisory 

Committee Meeting, (November 29, 2023) 

available at https://www.sec.gov/fles/sbacommittee-meeting-transcript-11292023.pdf; 

Investor Advisory Committee webcast (Sep. 21, 

2023) available at https://www.youtube.com/ 

watch?v=x3PAWKr_Lyk; SEC, “Report on the 

42nd Annual Small Business Forum,” (Sep. 26, 

2023) at 9. available at sec.gov/fles/2023_oasb_ 

annual_forum_report_508.pdf. 

335 See, e.g., “Diverse Founders and Investors” section 

of the Report above, at 52. 

336 See, e.g., Letter from the SEC Small Business 

Advisory Committee, supra note 334. 

337 See, e.g., “Rural Communities” section of the 

Report above, at 66-67. 

338 Under the COVID-19 relief in place from May 4, 

2020 through August 28, 2022, issuers ofering 

$250,000 or less in a 12-month period could 

fulfll the fnancial statement requirements by 

providing fnancial statements of the issuer and 

certain information from the issuer’s Federal 

income tax returns, both certifed by the principal 

executive ofcer. Currently, for oferings of greater 

than $124,000 and up to $618,000, or for frst 

Crowdfunding oferings of up to $1,235,000, 

the issuer must provide fnancial statements that 

have been reviewed by a public accountant that is 

independent of the issuer. 

339 This would be consistent with the COVID-19 

relief ofered by the Commission from May 4, 

2020 through August 28, 2022. See Temporary 

Amendments to Regulation Crowdfunding, Rel. 

No. 33-10781 (May 4, 2020), available at https:// 

www.sec.gov/fles/rules/interim/2020/33-10781. 

pdf and Temporary Amendments to Regulation 

Crowdfunding; Extension, Rel. No. 33-10829 

(Aug. 28, 2020), available at https://www.sec.gov/ 

fles/rules/interim/2020/33-10829.pdf. 

340 See, e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 18. 

341 Id. at 14-16. 

342 See e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 17; See also, e.g., “Ofce of the Advocate 

for Small Business Capital Formation Annual 

Report Fiscal Year 2022,” supra note 54, “Small 

and Emerging Businesses” section at 18. 

343 See, e.g., “Small and Emerging Businesses and 

Exempt Ofering Data” section of the Report 

above, at 17. 

344 Currently, for oferings of greater than $124,000 

and up to $618,000, or for a frst crowdfunding 

ofering of up to $1,235,000, the issuer must 

provide fnancial statements that have been 

reviewed by a public accountant that is 

independent of the issuer. 

345 See 17 CFR 227.100(b)(3) available at https:// 

www.ecfr.gov/current/title-17/chapter-II/part-227. 

346 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/fnal/2020/33-10884.pdf. 

347 See Transcript of the 42nd Annual SEC Small 

Business Forum “Building Entrepreneurial 

Ecosystems: Laying the Groundwork to Support 

small Businesses and their Investors” (Apr. 25, 

2023) at 18, available at https://www.sec.gov/fles/ 

day-2-building-entrepreneurial-ecosystems.pdf. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 118 
348 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. 

349 Id. at 15. Market participants look to staf 

guidance when trying to determine whether broker 

registration is required. 

350 See, e.g., “Women Business Owners and 

Investors” section of the Report above, at 39-

49, “Diverse Business Owners and Investors” 

section of the Report above, at 50-61, and “Rural 

Communities” section of the Report above, at 66. 

351 See, e.g., “Diverse Business Owners and Investors” 

section of the Report above, at 54. 

352 See Brian Beckon, “New Rules for Finders? Not 

So Fast...,” Cutting Edge Capital (May 9, 2022) 

available at https://www.cuttingedgecapital.com/ 

new-rules-for-fnders-not-so-fast/. 

353 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,” supra note 348. 

354 See Ofce of Information and Regulatory Afairs, 

Ofce of Management and Budget, U.S. Securities 

and Exchange Commission Agency Rule List (Fall 

2023), supra note 324. 

355 See “What happens if a startup does not comply 

with securities laws?”, available at https://www. 

sec.gov/education/capitalraising/building-blocks/ 

noncompliance; “What is a broker dealer?”, 

available at https://www.sec.gov/fles/oasb-brokerdealer-building-block.pdf. 

356 See Deloitte, Venture Forward and NVCA, supra 

note 197, at 8. 

357 See “Mature and Later-Stage Business” section of 

the Report above, at 27. 

358 Id. at 24. 

359 See “Mature and Later-Stage Business” section of 

the Report above, at 27; See also Letter from the 

SEC Small Business Capital Formation Advisory 

Committee to Chair Gary Gensler, (Feb. 28, 

2023) at 3, available at https://www.sec.gov/fles/ 

committee-perspectives-letter-022823.pdf. 

360 See, e.g., “Mature and Later-Stage Business” 

section of the Report above, at 23 and “Initial 

Public Oferings and Small Public Companies” 

section of the Report above, at 32. 

361 See, e.g. “Women Founders and Investors” section 

of the Report above, at 49, and “Diverse Founders 

and Investors” section of the Report above, at 56. 

362 See, e.g., “Women Founders and Investors” section 

of the Report above, at 48, and “Diverse Founders 

and Investors” section of the Report above, at 59; 

Ofce of the Advocate for Small Business Capital 

Formation Annual Report Fiscal Year 2022, 

supra note 54, “Minority Business Owners and 

Investors” section at 60. 

363 See, e.g., “Diverse Founders and Investors” section 

of the Report above, at 59. 

364 See e.g., Von Bryant, et al., “Five things to know 

regarding American Alliance for Equal Rights v. 

Fearless Fund”, Westlaw Today, (Aug. 22, 2023) 

available at https://today.westlaw.com/Document/ 

Ic82eb8c1412311ee8921fbef1a541940/View/ 

FullText.html. 

365 See Dominic Madori Davis, “Fearless Fund’s Arian 

Simone on why a downturn is business as usual for 

minority founders,” (June 15, 2022) available at 

https://techcrunch.com/2022/06/15/fearless-fundsarian-simone-on-why-a-downturn-is-business-asusual-for-minority-founders/. 

366 See Ofce of the Advocate for Small Business 

Capital Formation Annual Report Fiscal Year 

2022, supra note 54, at 78-80. 

367 Over the past fve years, the amount of capital – or 

“dry powder” – ready to be invested by VCs has 

continued to increase. In 2022, it reached $280 

billion, 61% of which is concentrated in megafunds with $500 million or more in commitments. 

See, “Mature and Later-Stage Business” section of 

the Report above, at 26. 

368 For information on the Section 3(c)(1) exemption 

from the Investment Company Act of 1940, 

See “How do private funds provide capital to 

early-stage companies?” available at https://www. 

sec.gov/education/capitalraising/building-blocks/ 

private-fund. 

369 Id. 

370 See “IPOs and Small Public Companies” section of 

the Report above, at 30. 

371 Id. at 33. 

372 Id. at 36, 38. 

373 Id. 

374 Id. at 33-35. 

375 See “Diverse Founders and Investors” section of 

the Report above, at 50-56. 

376 See “Women Founders and Investors” section of 

the Report above, at 41-42. 

377 See “Diverse Founders and Investors” section of 

the Report above, at 57 (there has been, however, 

a signifcant increase in African American/Black 

directors between 2019 and 2023); “Women 

Founders and Investors” section of the Report 

above, at 46-47. 

378 See “Women Founders and Investors” section of 

the Report above, at 47. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 119 
379 See, e.g., “Insider Trading Arrangements and 

Related Disclosures,” Release Nos. 33-11138; 

34-96492; File No. S7-20-21 (Dec. 14, 2022), 

available at https://www.sec.gov/fles/rules/ 

fnal/2022/33-11138.pdf (while the Commission 

did not 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 and will beneft from 

a six-month transition period for compliance); 

“Cybersecurity Risk Management, Strategy, 

Governance, and Incident Disclosure,” Release 

Nos. 33-11216; 34-97989; File No. S7-09-22 

(Jul. 26, 2023), available at https://www.sec.gov/ 

fles/rules/fnal/2023/33-11216.pdf (while the 

Commission did not exempt smaller reporting 

companies, those companies were provided 

a delayed compliance date for some of the 

requirements, an accommodation that was not in 

the proposing release). 

380 See, e.g., “Share Repurchase Disclosure 

Modernization,” Release No. 34-97424; IC34906; File No. S7-21-21 (May 3, 2023), 

available at https://www.sec.gov/fles/rules/ 

fnal/2023/34-97424.pdf. See also, “Listing 

Standards for Recovery of Erroneously Awarded 

Compensation,” Release No. 33-11126; 34-

96159; IC-34732; File No. S7-12-15 (Oct. 26, 

2022), available at https://www.sec.gov/fles/rules/ 

fnal/2022/33-11126.pdf. 

381 See Transcript of the 42nd Annual SEC Small 

Business Forum, Accessing the Public Markets: 

Becoming and Staying a Public Reporting 

Company (April 27, 2023) at 66, available at 

https://www.sec.gov/fles/day-4-accessing-publicmarkets.pdf. 

382 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))]. 

383 Committee members include the SEC’s Advocate 

for Small Business Capital Formation (vacant 

at the end of fscal year 2023) and three nonvoting 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). These non-voting 

members are indicated with an asterisk. 

384 Committee members include the SEC’s Advocate 

for Small Business Capital Formation (vacant 

at the end of fscal year 2023) and three nonvoting 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). These non-voting 

members are indicated with an asterisk. 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

1-21 192-209

22-52 210-237

53-67 238-269

68-85 270-291

86-118 292-305 

119-136 306-329 

137-146 330-347 

147-172 348-378 

173-191 379-384 

OFFICE | Meet the Team 

SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 120 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 121 

As a final note to our report, please meet your SEC Small 

Business Advocacy Team! 

AMY REISCHAUER 

Acting Deputy Director 

JULIE ZELMAN DAVIS 

Senior Special Counsel 

PABLO ECHEVERRI 

Special Counsel 

SARAH R. KENYON 

Capital Formation Analyst 

VIKKI PORTER 

Visual Design Strategist 

T.J. COLLINS 

Attorney Detailee 

KIM DINWOODIE 

Engagement Program Strategist 

COURTNEY HASELEY 

Special Counsel 

Contents 

MISSION | Who We Are 

DATA | State of Capital Formation 

POLICY | Recommendations 

ADVOCACY | What We Do 

COMMITTEE | Highlights 

ENDNOTES | All the Details 

OFFICE | Meet the Team 

SHEEN MUNSHI 

Special Counsel 

JENNY RIEGEL 

Policy Manager 

MALIKA SULLIVAN TODD VANLAERE 

Executive Assistant Law Clerk 
SEC OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION | FISCAL YEAR 2023 ANNUAL REPORT | 122 

ABOUT THIS REPORT + ACKNOWLEDGEMENTS 

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

for Fiscal Year 2023 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: Daniel 

Bresler, Juan Carlos Forero, Angela Huang, Olga Itenberg, Vladimir Ivanov, Andy Kim, 

Isaac Kuznits, Rey-Er Lee, Wei Liu, Chris Onrubia, Elizabeth Phillips, Zehra Sikandar, 

Brian Ward, Guang Yang, Jeorge Young, and Huaiqiang (John) Zheng. 
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