SEC Commissioners Ask Advisory Committee for Input on Small Business Capital Raising Issues

SEC Commissioners asked the Small Business Capital Formation Advisory Committee to address capital raising in the context of current market conditions, including, among others, rising interest rates and the increasing use of artificial intelligence.

• SEC Chair Gary Gensler. Mr. Gensler asked for input on small business capital raising both within the context of (i) rising interest rates and the difficulties faced by regional banks and (ii) the increasing use of predictive data analytics, including artificial intelligence and how it has impacted funding practices.
• SEC Commissioner Mark T. Uyeda. Mr. Uyeda requested input on access to quality legal services, especially in rural areas, helping small business owners understand capital raising options. He also asked the Committee to consider whether the regulatory framework for registration exemptions has become "too complicated." Further, he asked how the SEC can prevent future regulations from imposing challenges on underrepresented entrepreneurs. He asked whether (i) increasing the income and net worth thresholds under the definition of "accredited investor" would increase difficulty in obtaining funding and (ii) further regulation of private markets would disproportionately impact underrepresented entrepreneurs.
• SEC Commissioner Jaime Lizárraga. Mr. Lizárraga asked the Committee to examine funding gaps for underrepresented entrepreneurs. Specifically, Mr. Lizárraga asked the Committee to consider the unique challenges underrepresented entrepreneurs experience, such as (i) limited access to capital affecting their daily operations and their business growth potential, (ii) a lack of support when applying for financing and (iii) "gaps" between entrepreneurs and investors during early-stage startups.