Latest from the Office of Small Business Advocacy

I’ve written previously about the SEC’s catchily-titled Office of the Advocate for Small Business Capital Formation (OASB). In summary, the OASB was created to support emerging companies through education and guidance on capital raising and other formation/start-up issues, to provide analysis and policy recommendations, and (as the name suggests) to advocate on behalf of emerging companies and their investors, with an eye to the perspectives of, and impacts on, small businesses. 

In January 2026, the OASB released its Staff Report[1], required as part of the Office’s statutory mandate, summarizing its work and presenting research and information on capital formation and

Jane Goodall

For the second post in a row, my writing topic plans have been derailed by current events. Today, I’d like to pay tribute to Jane Goodall, who died on October 1 at the age of 91, and how I see her as not just a role model for quiet patience, peace, and understanding others, but also as an exemplar of the entrepreneurial spirit.

A little background – Jane Goodall was born in London in 1934. She recalled her father giving her a stuffed chimpanzee when she was a little girl, and credits the toy as her first inspiration and origin for her desire to learn more about primates. In 1957, Jane traveled to Kenya with money earned from waitressing. In Africa, Jane reached out to Louis and Mary Leakey, famed paleontologists, who first gave her a secretarial job at the National Museum in Nairobi, and then invited her to work with them in their archaeological digs. With the support of the Leakeys, Jane traveled to Tanzania, where she began her observation of chimpanzees in in 1960. Jane earned her PhD in Ethology (the study of non-human animals) with the completion of her thesis, The Behavior of Free-living Chimpanzees in the Gombe Stream Reserve and the rest, as they say, is history.

We’re In This Together

I have been all geared up for a post noting some of the questions and issues for small businesses that have arisen in the first few months of the Trump administration. I did my best to find both good and bad news – for example, the House version of the One Big Beautiful Bill increases and makes permanent the pass-through entity deduction available for LLC and S-corp owners’ business-related income. To the relief of many, the Corporate Transparency Act finally appears dead, at least for U.S. companies. And the Small Business Administration reports an increase in the number of SBA loan approvals, although this apparent demand for capital could be read as good news (small businesses are investing in growth and expansion), or not-so-good news (that small companies are being forced to borrow just to stay in business).

Of course, small and start-up businesses are also facing a number of new challenges – tariffs, and even the threat of tariffs, are in many cases increasing business expenses, reducing profit margins, and disrupting supply chains. The uncertainty surrounding the administration’s tariff policy make hiring, expansion, inventory management, and other operating decisions tricky. Interest rates remain high and despite the above-noted increase in SBA loan approvals, SBA loan eligibility and requirements have become stricter, and the agency is eliminating a number of programs that facilitate participation in federal contracts by women-owned and minority-owned businesses.

Requiem for the Penny?

On February 9, 2025, at 8:27, Donald Trump posted (from his Super Bowl box?) that production of the U.S. penny coin will cease.

Can this really happen? And if so, can it work?

The penny, worth one cent, costs approximately 3.7 cents to mint. It’s estimated that there are approximately 240 billion pennies floating around out there ($2.4 billion dollars!), many of them in change jars, on your car floorboards, swimming around in the bottom of your purse, or buried in your couch cushions – in other words, not being put back into circulation. But retailers and other money handlers still make change and need pennies to do so – so they need to “buy” more pennies from their banks, which in turn need to obtain more pennies from the Mint. The U.S. Mint lost more than $85 million making pennies in 2024 – 3.7 cents at a time.

The Latest on Equity Crowdfunding

We’re excited to share that Lathrop GPM lawyers have again worked with an entrepreneurial client to successfully launch a crowdfunding offering. This time with a company specializing in products and related services for producing non-alcoholic offerings in the craft beverage industry. As always, we are constantly amazed at the level of originality, energy, effort, and, to state the obvious, entrepreneurship that infuses these endeavors at every level!

Our latest crowdfunding client success made us realize that it’s been a while since we’ve written about Equity Crowdfunding; so I think we’re well overdue for an update! As we have written before, prior to the 2021 SEC rule changes (the “2021 Rule Changes”), crowdfunding was limited to offerings of up to only $1.07 million, and investment by the “crowd” through “special purpose vehicles” (which has the practical effect of listing potentially hundreds of “crowd” investors as a single shareholder on your cap table) was not permitted. As a result, crowdfunding at that time did not present a very attractive capital-raising mechanism for most entrepreneurs; few such offerings had been initiated and most of them had not been unsuccessful. The 2021 Rule Changes, among other things, increased the maximum raise to $5 million, and permitted the use of a special purpose vehicle, organized and operating for the sole purpose of acquiring, holding and disposing of securities issued pursuant to a crowdfunding offering, and into which all “crowd” members made their investment. Three years on, how have the 2021 Rule Changes affected the use of crowdfunding as a productive means of raising capital?

Let’s roll the tape! *

Women Who Mean Business

In previous posts, we’ve talked about the unpleasant but inescapable reality that an entrepreneur needs money to get a new business up and running, and to keep it running. Friends and family, crowdfunding, Shark Tank—all good possibilities.

Today, though, I’d like to remind all the women entrepreneurs out there of the numerous resources available to women-owned businesses. And out there you are! The 2023 Annual Report of the National Women’s Business Council estimates that women own more than 14 million companies, around 39% of privately held businesses, representing an increase of 13.6% from 2019 to 2023. Check out these:

Artificial Intelligence Meets Elvis Presley

Broadly defined, Artificial Intelligence, or AI, refers to technology that can simulate human intelligence, particularly tasks generally thought of as requiring human or cognitive function, such as reasoning, problem-solving, and decision-making. We’re all familiar with the all-knowing “algorithm” on our phones and TVs that appears to hear and see all, and just generally know everything that is happening in our lives.

Obviously, AI can be tremendously productive, providing tools for increased efficiency, cost-savings, and the commodity we all could use more of – time! The Small Business and Entrepreneurship Council (SBEC) late last year released a report showing that 48% of small businesses used AI tools and applications in 2023, and that 93% of small business owners agree with that “AI tools offer cost-effective solutions that drive savings and improve profitability.” Other noteworthy stats from the report include high percentages of small businesses using AI for marketing and sales, drafting business plans, financial management and planning, human resources, and project management, among a myriad of other tasks.

AI also encompasses the ability to create a broad variety of content, from song lyrics to legal briefs, and to manipulate images, sound, and other materials – often without the consent of those whose images and voices have been doctored through the use of AI technology. A growing number of applications can generate content, create realistic images and videos from descriptions, and copy or clone images, sounds, and voices.

Of course, such use can infringe privacy and intellectual property rights, and raises a host of legal and ethical concerns. And so (and here I’d like to use AI to imitate your mother’s voice and image), this is why we can’t have nice things (or, in the legal context, regulation is here, and more is likely on the way).

Privacy and publicity laws have long protected the use of a person’s image, name, or likeness in commercial use. Tennessee – home of Music City, Nashville - has become the first state to protect vocal likenesses for both commercial and non-commercial use. The law, signed on March 21 and effective July 1, is called the Ensuring Likeness, Voice, and Image Security Act. The so-called ELVIS Act expands Tennessee’s Personal Rights Protection Act to cover any “sound in a medium that is readily identifiable and attributable to a particular individual, regardless of whether the sound contains the actual voice or a simulation.” Both using a voice simulation or creating an AI tool or engine for such purpose are grounds for a civil action and can also be punished as a misdemeanor with penalties including fines and jail time.

A number of states are proposing similar legislation, and more efforts will likely follow. Federal regulation and rulemaking are also underway, with the FTC recently seeking public comment on a proposed rule prohibiting impersonation of individuals generally, and the creation of technology that can facilitate such impersonation. The US Copyright Office is undertaking a study and initiative to examine the impact of generative AI on copyright law and policy.

AI tools clearly serve an important function and offer new tools to small businesses in the constant challenge to save time and money, particularly in the current labor market in which unemployment is low, skilled workers can be difficult to find, and remote work is still commonplace. Users should be mindful, however, of the evolving, and likely increasing, regulatory environment.

It may be true that you Can’t Help Falling in Love, but keep a Suspicious Mind, Don’t Be Cruel, and don’t let AI be the Devil in Disguise (thought up that last sentence all by myself with no AI assistance)!

Happy National Trivia Day 2024!

Happy New Year, entrepreneurs! As we enter 2024, with Christmas, Hanukkah, Kwanzaa, New Years, and all the other minor holidays behind us, we can celebrate the start of 2024 with National Trivia Day, which was yesterday! To commemorate this most auspicious occasion (and a little fun as we get back into the grind of working after so many holidays), here’s a quick Trivia Quiz with, of course, an entrepreneurial spin – enjoy, and good luck! (Answers follow the quiz)

Can You Use Someone Who Isn’t a Registered Broker to Help Me Raise Capital?

Tackling a question that so often entices entrepreneurs – can I pay someone to help me find investors? When funding a new enterprise, how can a scrappy small business owner break into those upper echelons and c-suites where high-dollar investors are presumably just looking for the right start-up to fund – folks who would recognize the brilliance of your vision and gladly sink capital into your enterprise…if only they were aware of it!

It’s about at this point that many an entrepreneur remembers they have a rich relative, or a deep pocketed friend or business connection, or maybe just know a high roller that knows a bunch of other high rollers that can be convinced to invest. And this high roller – let’s call him Rich Uncle Pennybags – not only knows all the Sharks (see this post and this post by fellow entreVIEW authors if you’re interested in more about the “Tank”), he will be happy to find investors for you in exchange a fee that’s based on the amount of capital he successfully raises for you, so you’re not out of pocket one dollar! Brilliant, right?

And now we’re reached the point where the buzzkilling entrepreneur’s attorney weighs in – in most cases you can’t do this (well, at least legally anyway…). Unfortunately, Uncle Pennybags’ efforts would likely be deemed “broker-dealer activity”, which is subject to regulation and requires licensure.

Both federal (SEC) and state rules prohibit a person from acting as a “broker” unless that person is registered with the SEC and the state in which the person conducts business. A “broker” is defined as “any person engaged in the business of effecting transactions in securities for the account of others.” Unfortunately, the rules do not define what constitutes “effecting transactions in securities for the account of others,” but the SEC has identified certain activities that will generally be deemed to “effect” securities transactions, including:

• assisting in structuring a transaction,
• identifying potential purchasers,
• soliciting transactions,
• participating in taking orders for purchase of the subject securities,
• advising investors on the merits of the investment, or
• receiving commission or other transaction-based compensation in exchange for their services.

Well, so what if Uncle Pennybags just introduces you to potential investors? Unlike a broker, someone just acting as a “finder” does not need to be registered, although the line between “broker” activities and “finder” activities is at least a little blurry. In general, a “finder” is someone who merely provides a prospective investor’s contact information to the company that’s raising capital. But remember, by far the biggest red flag for securities regulators is the payment of commission-based compensation; that is, paying a fee based on the number of investors or a percentage of the amount of money invested. We here at entreVIEW urge caution if you want to go down the “finder” road – there’s a possibility it can be done, but only if you really pay close attention to the structure and compensatory arrangements.

Why should you care? You, the entrepreneur, are not the one engaging in unlicensed activity – isn’t that just a problem for Rich Uncle Pennybags? Unfortunately, no – the entrepreneur’s association with an unregistered broker in prohibited by state and federal law, violation of which can lead to fines, penalties, and sanctions. Worse, an investor whose investment was solicited by an unregistered broker may be able to force you to return any money invested. In addition, it could negatively impact your ability to raise future capital and or sell your Company in the future!!

If you still believe Uncle Pennybags and his rolodex can be really helpful, the safest thing to do is to try and work out a compensation arrangement that is not commission-based, such as a flat fee, and limiting his activities to only providing introductory information. And don’t forget other sources of funding that may be available to you—family, friends, and your own connections, small business loans or grants, angel investors, and crowdfunding platforms as discussed in this post.

Growing an Entrepreneur Farmer

Today I’d like to share an unusual and inspiring story of entrepreneurial spirit, originality, creativity, and, perhaps most important, perseverance.

Scottie Thelman grew up in Lawrence, Kansas, the son of a doctor and a minister. Although Lawrence is a smallish town (and home of the 2022 NCAA Champion Jayhawks – just sayin’), it’s not a completely rural community. Lots of wheat and other fields around, however, and Scottie was originally inspired to focus on the business side of agriculture.

Next Up in the Tank – Lessons from Watching the “Sharks”

Acknowledging up front that “Shark Tank” is not exactly breaking news (the show premiered in 2009 and one of the other authors of entreVIEW wrote a post about it back in 2014), I still like to point out how helpful it can be to entrepreneurs, even those who don’t make it into the “Tank”. In initial consultations with start-ups and early-stage companies looking to raise capital, I often bring up Shark Tank and the lessons that can be learned from watching it (I generally recommend casual viewing – my husband can watch for hours, which drives me crazy).

Seriously – learn from watching often-hapless people pitch often-ridiculous products and concepts to a bunch of millionaire/billionaires, frequently subject to brutal ridicule? Actually, entrepreneurs can incorporate many lessons from the show when making their own pitches to potential real-life investors.

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.

Crowdfunding the Entrepreneurial Spirit!

Author: Patricia Garrigner-Strickland

We had a bit of a snowy winter here in Kansas City and after every storm, I had at least one teenage boy ring my doorbell and ask to shovel off my driveway (for a price). On a recent trip to the grocery store, I encountered a group of Girl Scouts selling cookies (I bought three boxes of Thin Mints and ate an entire sleeve on my way home). A new client, a photographer and graphic designer, is looking to expand her business to include art shows and more event bookings. Another client is looking to develop an interactive video game based on martial arts instruction.