I’ll Take “Advocating For Small Businesses And Their Investors” For $800, Please! - Remarks At SEC Speaks, Stacey Bowers, Director, SEC Office Of The Advocate For Small Business Capital Formation, Washington D.C., May 20, 2025

Good morning. Thank you to PLI for once again hosting this event and to the studio audience, both live and virtual, who has joined us today. In preparing these remarks and knowing I was lucky enough to take the stage between all of you and your lunch break, I thought, how do I pack in all the ways our Office seeks to support small businesses in a few short minutes before that mental lunch bell rings? And just like that, I found myself in my head somewhere between the Final Jeopardy[1] countdown music and those shopping shows where contestants race around with a grocery cart. Embracing that theme, welcome to my trip down “game show” memory lane to revisit some famous, and possibly not so famous, game shows. Our journey will highlight some of what our Office does, and what is happening with capital formation in the small business ecosystem. However, before I test your game show acumen, I need to remind all of you that I am speaking in my official capacity as the Director of the Office of the Advocate for Small Business Capital Formation, and my remarks do not necessarily reflect the views of the Commission, the Commissioners, or other members of the Commission Staff.

For those of you who were here last year, you might remember I had only been the Host, oh I mean the Director, of the Small Business Advocacy Office for 79 days. Today, while my duration as Director has lengthened in tenure to 16 months, one thing from those initial days still holds absolutely true — this Office is made up of an incredible bunch of dedicated individuals who are passionate about improving small business capital formation and serving as a voice for small businesses and their investors. While we may have barely enough folks to field a couple of “Family Feud”[2] teams, this small team continues to amaze me on a daily basis with their accomplishments and commitment to the Office’s mission. Just looking at the current fiscal year, since October 2024 the Office has engaged in 34 outreach events and dozens of policy meetings, produced the 2024 Annual Report, created new educational resources and content, reviewed dozens of proposed bills and amendments related to small business capital formation, and organized and hosted the 44th Annual SEC Small Business Forum. And that’s on top of our daily collaboration with our SEC colleagues on matters of importance to small businesses and their investors. I am proud to be a part of this hard-working team and for the opportunity to serve alongside them as we seek ways to continue to support and advocate for the small business community. And now, I’m pleased to present the Small Business Advocacy Office.

Jeopardy

First up: Let’s play a little Jeopardy. Actually, let’s jump straight to some Double Jeopardy questions, so I don’t spill all the way into the break.

I’ll start with “Little Known Gems at the SEC” for $1,200. Congress created this Office with the longest name in the agency to advance the interests of small businesses and their investors at the Commission and in the capital markets. You got it! What is the Office of the Advocate for Small Business Capital Formation? Many of the folks that our Office advocates for may not have gotten that one, and we are on a mission to change that by getting the word out about who we are and what we do for small businesses and their investors. Small businesses cut a wide swath for this Office — from a start-up to a small public company. We are tasked with assisting in resolving problems, identifying areas where small businesses and their investors would benefit from changes in regulations, identifying problems that small businesses encounter with securing capital, analyzing the impact of proposed rules and legislation, and engaging in outreach on capital formation issues.[3]

How do we go about fulfilling these vital functions? We engage with the community — we meet, talk, and listen to small business founders, investors, and those parties that support them. And what do we do with all of that feedback that we learn and gather? It informs our advocacy on behalf of small businesses and their investors so we can amplify their voices. The questions that we get from the small business community often serve as indicators of areas where that community could benefit from additional clarity, and where we can assist by working with our colleagues to help bring about solutions and by creating educational resources on those topics. In addition, we rely on what we hear from our stakeholders when we make the policy recommendations that we include in our Annual Report. The Annual Report is a culminating event for our Office — we spend the year reviewing data and studies to report on what’s happening with small business capital formation and to ensure that the policy recommendations are data-driven.

Let’s continue with Little Known Gems for $1,600. This is where you can find a wealth of educational resources for small businesses and their investors. Tough one, huh? Let’s go with What is sec.gov? That would be correct! You can locate our educational tools, resources, videos, and more from any page on the SEC’s website by clicking on the “small businesses” link in the upper right-hand corner. We hope you will take the time, or suggest that your clients take the time to explore the Capital-Raising Building Blocks — one pagers that cover many of the fundamentals of raising capital, to take a gander at the Glossary, which cuts through the legal and market-driven jargon used when small businesses raise capital, or to tune in to the Let’s Talk Small Business video series to hear insights from experts and thought leaders in the field. Plus, don’t forget to pop over to our Office’s homepage at sec.gov/oasb to dig into our colorful Annual Report, which showcases the state of small business capital formation, watch the recent SEC Small Business Forum recordings, or sign up for our email alerts to learn about upcoming events and new resources.

The resources, videos, and Annual Report contain a wealth of useful information for anyone involved in small business capital formation. Plus, what better way to prepare for your upcoming appearance on “It’s Academic,”[4] — I can see some of you remember that one — where your knowledge of small business capital-raising will be put to the test. Hey, does anyone know which states had the second greatest number of Regulation Crowdfunding or Regulation D offerings over the twelve-month period ended June 30, 2024? The answer to that question might just score your team the top prize! Even though I am inclined to send you to our Capital Trends Maps to find the answer, I’ll be kind and tell you that the correct responses are Pennsylvania and New York, respectively. [5]

The $100,000 Pyramid

Next up, let’s revisit another old game show favorite: the “$100,000 Pyramid.”[6] Small businesses need capital to open their doors, start operations, and grow. While some businesses hope to grow and scale their funding beyond $100,000, many are often seeking much smaller amounts to get started. Recently, 58% of new businesses began operations with less than $25,000, and 41% sought less than $50,000 in external financing or credit sources.[7] What are the primary ways that small businesses use that capital? To meet operating expenses, expand the business, or maintain available credit.[8]

Even though 40% of small businesses seek external financing, only 2% actually receive an equity investment, with those equity investments predominantly coming from the business owners or friends and family[9] — once again echoing the importance of networks and support, including from other entrepreneurs, professional networking groups, and college networks. Through our Office’s own outreach and engagement efforts, we have discovered time and again that even in many big cities, the local small business community gives “small town” vibes with networks of entrepreneurs, investors, and support organizations connecting by a few degrees of separation.

The Match Game

Every year, our Office has the privilege of speaking with a wide range of small business founders and investors from across the United States, as well as the those who provide assistance, advice, and guidance to them. This gets me thinking about the game show “Match Game”[10] — does anyone remember that fill-in-the-blank show from the 60s and 70s? Here’s an example: what would be a fill-in-the-blank response to this statement: “small and emerging businesses seek [BLANK] through an accelerator or incubator?” The game-winning response would be “support.” But other matching answers might include network development, access to potential investors, mentorship from business experts, and business skills development.[11]

To cite a few more nuggets from the research reflected in our Annual Report: Did you know that small businesses that participate in an accelerator program generate more revenue and hire more full-time employees?[12] How about that angel investors play a key role in mentoring founders?[13] Or that venture capital firms do the same by interacting with their portfolio companies typically at least once a week?[14] These matches between small businesses and those who support them are an essential part of the ecosystem that helps to develop and foster founders on their capital-raising journeys. Many areas of the country have a vibrant ecosystem of start-ups and support organizations — I saw it first-hand last year in Kansas City, where a number of those support organizations can be accessed using the city’s free streetcar system! Yet small businesses in many areas outside of the traditional capital raising hubs still struggle to secure the necessary support and capital that they need.

Let’s Make a Deal

Talking to founders about how they seek investment capital brings to mind yet another game show, “Let’s Make a Deal,”[15] where an audience member might be selected based on their outrageous costume to make a deal with the host of the show. Now, founders may not resort to quite so much drama to get the attention of potential investors — at least I hope they don’t — but they do often find themselves searching out the best deal.

So, how do those potential deals pan out? Pre-seed and seed funding accounted for $6 billion of investments during the first half of 2024 with a median seed round of $3.1 million.[16] Venture capital firms invested $86 billion during that same time frame with a median round of $5 billion for Series A and B and $7 billion for Series C and D.[17] Initial public offerings raised $19 billion during the first half of 2024, with the technology industry leading the pack.[18] While some companies are making deals, exit values — generated across acquisitions, buyouts, and public listings — have been on the decline.[19] And the struggle to make a deal is further exacerbated for those small businesses located outside of the traditional capital raising hubs.

Press Your Luck

My time as your game show host is quickly coming to an end, and I certainly don’t want to “Press [My] Luck”[20] and have one of those whammies from that show pop up on the screen behind me. So, instead, I will bring my remarks to a close and leave each of you with some parting words.

Do not forget to spread the word about the Small Business Advocacy Office with your colleagues, clients, and those who support the small business capital formation ecosystem. This Office exists to advocate and be a voice for small businesses and their investors. We continue to be committed to helping them find the support, guidance, and resources that they need to succeed on their journeys. One of the ways in which we can fulfill our vital role is to hear from founders and investors, as well as those who advise and champion them. You can always reach us at smallbusiness@sec.gov with questions or ideas. And do not forget to visit our resources by clicking on the “small businesses” link on sec.gov or relish the in-depth analysis provided in our Annual Report.

I appreciate you being an engaged studio audience today and do not blame me when you find yourself tuning into the Game Show Network tonight and yelling “no whammies, no whammies!”[21] Enjoy the remainder of this wonderful conference. And, the survey says, “thank you.”[22]