Good morning. I’m pleased to speak with the Small Business Capital Formation Advisory Committee. As is customary, I’d like to note that my views are my own as Chair of the Securities and Exchange Commission, and I am not speaking on behalf of my fellow Commissioners or the staff.
I want to welcome the four new members to the Committee. I thank each of you for your willingness to serve, and for bringing your important perspectives on behalf of investors.
Today, I understand the Committee will focus on three topics, ranging from venture capital fundraising to exemptions for private fund advisers, and lastly the challenges faced by new fund managers.
With regards to the first topic, venture capital funds play an important role in alternative capital raising. Their advisers also give advice to startups and entrepreneurs themselves.
Small and early-stage funds often start out raising money from friends and family. Success, though, often means eventually outstripping those friends’ and families’ available capital. That’s why both relationship-based fundraising and public advertising can play critical roles at different stages.
Together, these fundraising methods have helped develop our vibrant private markets alongside our robust public markets. I believe Congress understood this by including in the Investment Advisers Act of 1940 and the Investment Company Act of 1940 certain exemptions from adviser registration and from being an investment company. Today, the $30 trillion private fund sector—private equity, private credit funds, hedge funds, venture capital—in aggregate surpasses the size of the U.S. banking sector.[1]
In addition, I understand the Committee also will hear about challenges facing new fund managers. A core principle of our securities laws is about fairness and access. Regardless of anyone’s background, color, gender, or geography, anyone who wishes to access our capital markets should have the same opportunities to do so. I look forward to hearing about how the SEC can best support those who are just starting out in the fund management business.
Thank you.
[1] Per SEC Staff analysis of Form ADV data, inclusive of assets attributable to securitized asset funds, as of year-end 2022.
