By Liz Dunshee and Reid Hooper
Last week, the SEC held one of its most anticipated annual events – the Small Business Forum – which serves as both a status check and brainstorming session for capital formation issues affecting emerging and newly public companies. The Forum gives business leaders, practitioners, and other members of the public an opportunity to weigh in on capital-raising policy recommendations that will be delivered to Congress.
In their respective opening remarks, SEC Commissioners Paul Atkins, Hester Peirce and Mark Uyeda kicked off the Forum by raising a few topics worth watching:
- The exempt offering framework is working well for larger offerings – but continues to pose challenges for early-stage businesses.
- Could a micro-offering exemption – which would allow sales of shares without any requirements besides the avoidance of fraud – help founders avoid regulatory complexities that currently apply more broadly?
- Could regulators move beyond a binary approach to federal preemption in order to eliminate duplicative qualification processes between federal and state authorities? For example, when an offering is qualified in the state of a company’s principal place of business, should the offering still be reviewed by multiple other states? Why should a notice filing in the other states not be sufficient? Such a framework could promote more effective oversight among state regulators, reduce the time it takes to fully comply with offering regulations, and maintain effective investor protection.
- Regulatory landmines are hampering smaller funds and contributing to significant concentration in the venture capital industry.
- In the first seven months of 2025, roughly forty percent of all venture capital dollars flowed to just ten companies, while the share of deals below $5 million fell to a decade low of forty-nine percent. On the fundraising side, thirty firms accounted for approximately seventy-five percent of the total venture dollars raised in 2024.
- The House’s INVEST Act and the Senate’s Empowering Main Street in America Act could loosen fund regulations in a way that supports the growth-stage ecosystem.
- The public company experience should be scaled to make IPOs a better option for smaller companies.
- An expanded “IPO on-ramp” could incentivize more IPOs and provide a path for companies in all stages of growth and industries – especially where an IPO represents a capital raising mechanism for the company rather than a liquidity event for insiders.
- Moving away from mandatory quarterly reporting could allow smaller companies to more effectively allocate limited resources.
As the Forum demonstrates, both early-stage fixes and public company accommodations contribute to one of the Commission’s overall initiatives: to “Make IPOs Great Again.” A stronger pipeline of emerging companies is essential to the investment ecosystem, and so are targeted improvements to public company workloads.
To that end, one of the three Forum panels addressed the topic of “Public Company Perspectives: Considerations for IPOs and Small Caps.” Cooley’s Reid Hooper was a speaker on that one, which raised the following points and recommendations:
- The decision of whether and when to go public is like deciding whether to become a parent: it’s equal parts gut and math, and there’s never a perfect window. Focus on durable fundamentals and preparing to “ride the wind” of market fluctuations and public scrutiny.
- Industry factors also play a role. For biotech companies whose road to revenue is eight to ten years and roughly a billion dollars, the ability to raise follow?on capital quickly after listing can be the difference between momentum and stall. Companies may be able to complete a public raise in a few weeks versus 4–6 months privately – assuming the pipeline story is mature enough not to change immediately post?IPO
- The process of going public is more defined than private financing rounds. Bankers can lay out the working plan early – even before they’re formally hired – which makes the path clearer.
- Prepare for your IPO horizon 18-24 months out.
- That includes audit, internal controls and governance readiness – you don’t want those to be gating items when your market window opens.
- It also includes hiring a team with public company experience and running mock earnings calls and reporting timelines. Trusted advisors also play an important role in helping you “kick the tires.”
- Keep in mind that public investors can be in on Tuesday and out on Wednesday. You have to earn five minutes of attention with milestones and metrics that track to cash and credibility.
- The panel suggested these potential regulatory improvements, which may make their way into the report presented to Congress:
- Ease quiet-period limitations: Quiet?period limitations still constrain smaller companies that need to build a valuation narrative before research coverage finds them. Targeted safe harbors could allow companies to explain their story and build trust without fear of gun?jumping. Existing testing?the?waters accommodations are helpful and deserve to stay strong.
- Explore stickier scaled disclosure: Companies toggling between accelerated filer and smaller reporting company status absorb costs they can’t easily unwind – most painfully Section 404(b) attestation once they’ve built the infrastructure. Longer phase?ins or higher triggers would help; at a minimum, clearer, stickier thresholds that aren’t as dependent on market cap volatility would reduce the “just?in?case” spend.
- Expand shelf registration access and usability: For frequent small?dollar raises – ATMs, tactical primaries – S-3 cutoffs and limitations continue to cause friction, create punitive eligibility exclusions, and hamstring the very issuers who need flexibility most.
- Focus on cost reductions that move the needle: D&O insurance is a budgetary gut punch, for example. Are there policy initiatives that could mitigate risks and lower premiums?
- Modernize federal and state harmonization: Federal preemption only applies to securities listed on a national exchange. Once companies drop off an exchange and onto the over-the-counter market – which may occur if a company struggles to get coverage and ends up with a low market cap – the regulatory patchwork is extra challenging. Overlapping qualification requirements have also limited robust use of Regulation A for capital formation.
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