New emerging companies need money to grow, and the SEC wants to make the process less burdensome for the nation's entrepreneurs.
In the latest federal effort to improve the plight of the nation’s small businesses, the U.S. Securities and Exchange Commission has created a committee to address the capital needs of new emerging companies.
The new advisory committee will review regulations that can burden new emerging companies attempting to raise capital, sell securities and file required public reports, the SECannounced this week,. The Advisory Committee on Small and Emerging Companies will focus on businesses with less than $250 million in publicly traded stocks.
“Our capital markets are a critical source of funding for emerging companies and smaller public companies,” said SEC Chairman Mary Schapiro. “That is why a key component in our agency’s mission is to facilitate capital formation while at the same time protecting investors.”
Stephen M. Graham, a partner at Fenwick & West LLP in Seattle, and M. Christine Jacobs, CEO of Theragenics Corp. in Buford, GA, will head the committee, composed of representatives from venture capital groups, investment banks and small businesses, such as Zynga Inc. An observer member from the U.S. Small Business Administration has also joined the effort.
Among other issues, the committee will review rules restricting the ability of new emerging companies to advertise private securities offerings, as well as public reporting requirements faced by small publicly traded companies.
Starting a successful small business is still the surest way to achieve perpetual wealth, but the small business sector has suffered disproportionately in the prolonged economic downturn. Historically small businesses have created two of every three new jobs in America, but most entrepreneurs still reeling from the recession and are unable to fulfill their traditional roles of innovators and job creators. The National Federation of Small Businesses this week reported that confidence among small businesses has fallen to a 13-month low.
Business owners surveyed by Millionaire Corner in June expressed relatively strong concern about the state of the economy. Nearly 75 percent said they were very concerned about the possibility of a tax increase, compared to 57 percent of investors as a whole. Business owners were much more likely to spend less and save more as a result of the current economic situation, and expressed the deepest pessimism over the job market. More than 60 percent felt the job market was unlikely to improve within the year, compared to 48 percent of investors as a whole.