Thank you, Erica. Thank you to the Committee for your continued work and to today’s panelists for presenting today. I recently read Olympian Sydney McLaughlin-Levrone’s book, which inspired me to re-watch several of her races.[1] She set the world record in the 400 meter hurdles but did so with such ease that the hurdles almost seem like a non-event to the viewer. Her book made clear, however, that gliding over hurdles at breakneck speed requires not only a lot of natural talent but also hard work, persistence, tough lessons, and pain.
Of course, her story made me think of emerging fund managers and small public companies. Celebrating managers and companies that have succeeded in building thriving enterprises is wonderfully exhilarating, but we sometimes forget the difficult journey that brought them to success. Hard work is unavoidable and nearly every founder and fund manager has endured trials along the way, but regulation can increase or ameliorate the burdens. Today’s discussion and any ensuing recommendations can help the Commission identify regulatory hurdles that are impeding emerging fund managers and small public companies.
I am glad that the discussion of how best to support emerging fund managers and facilitate capital formation is continuing. An important piece of the puzzle is understanding how fund managers and angel investors find each other in the marketplace and develop relationships that facilitate a mutually beneficial deployment of capital. As the committee discussed previously, such professional relationships can be harder to form without pre-existing familial or personal relationships. I look forward to hearing any recommendations that these conversations generate.
This afternoon, the Committee will turn to issues further along in the start-up lifecycle: how small public companies think about access to capital and the cost of regulatory compliance. Our regulatory framework should ensure that at every stage of growth companies have access to capital with the end goal of becoming publicly traded so that all investors can participate in future growth. The once aspirational goal of becoming a public company seems to have lost its luster, but we can change that by identifying and addressing the hurdles to going and staying public.[2] I have some questions for your consideration during today’s meeting:
- What are the biggest impediments or market conditions swaying private companies away from entering the public markets?
- Once public, what are the most pronounced costs newly public companies bear and how could the Commission mitigate any costs that are necessary for investor protection and eliminate costs that lack a concomitant investor protection benefit?
- What changes should the Commission make to ease the burden on smaller public companies and public companies not listed on a national exchange?
[1] Sydney McLaughlin-Levrone, Far Beyond Gold: Running from Fear to Faith (2024).
[2] See, e.g., Office of the Advocate for Small Business Capital Formation Annual Report for the 2024 Fiscal Year at 35, available at: https://www.sec.gov/files/2024-oasb-annual-report.pdf (citing M&A activity, regulatory costs, and the availability of capital in the private markets as possible factors).
