I’m From the SEC, and I’m Here to Help!

Most entrepreneurs (okay, actually pretty much most people) don’t typically think of industry regulators as their friends, but the Securities and Exchange Commission’s Office of the Advocate for Small Business Capital Formation is here to change that!

Let’s take a moment to conceptualize the SEC for most entrepreneurs and start-ups: they’re the ones that burden you with those complex (and pricey!) registration requirements for offerings of your securities, and those pesky licensure requirements for anyone who wants to help you sell them. Yeah, yeah, there are a number of exceptions, but if you miss a step or try to get too creative, the SEC may be waiting with sanctions, penalties, or hefty fines (just ask Kim Kardashian what Section 17(b) of the Securities Act has to say about undisclosed payments for touting a security). And trying to do everything by the book generally requires filing of multiple notices and sometimes ongoing reports, all of which can get complicated and run up expenses and legal fees. So yeah…entrepreneurs might not think of the SEC as their best friend.

But before you decide the SEC exists solely to make life more difficult, let’s explore the Office of the Advocate for Small Business Capital Formation (OASB), an independent office within the SEC created in 2016 to support emerging companies, mostly privately held, but also small public companies. The OASB’s stated mission is to advance the interest of small businesses and their investors, which it effects by:

• educating small businesses and providing guidance through the formation and initial capital-raising phases;
• analyzing the real-world impact of proposed rules and regulations;
• recommending policy changes to the SEC and to Congress, based on its communication with, and advocacy for, small businesses.

Entrepreneurs and small businesses looking to take advantage of the OASB’s assistance and advocacy should start at the Office’s website, https://www.sec.gov/oasb. You’ll find a wealth of information and resources about the OASB’s work, including its annual report on capital formation, funding capital-raising, growth, challenges, and trends. The site also includes the OASB’s strategic plan for continued outreach, support, and advocacy in 2022 and beyond, as well as links to outside resources. My personal favorite is the Small Business Capital Raising Hub (www.sec.gov/capitalraising), an interactive tool that can walk you through initial company formation, early steps for funding decisions and planning ahead for raising additional funds in later rounds (including options you may not have considered or were even aware existed), where and how to find investors, and terms for your securities offering – kind of a “choose your own adventure” for entrepreneurs and early stage companies. And finally (of course), the site also includes regulatory advice, compliance guidance, and general do’s and don’t’s to consider as you continue down the path of building and funding your business – hey, it's still the SEC!