[{"_1":2,"_123":-5,"_124":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,75,87,99,111],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},"mediaId",6303798,"mediaKeyId","2470660-8e3afc7bfa7aae15f2d9a98e096a5613","parentId",2470660,"title","Entrepreneurs and VCs say Midwest and rural regions lack venture infrastructure; witnesses urge easier fund formation and local investor engagement","audioSeconds",5114,"startMs",2315000,"endMs",7429000,"viewUrl","/Search/View?dp=1&key=2470660-8e3afc7bfa7aae15f2d9a98e096a5613&start=2315&end=7429","thumbnailUrl","https://assets.pipeline.soar.com/2470660-8e3afc7bfa7aae15f2d9a98e096a5613/thumbnail_2315000.jpg","articleUrl","/articles/6303798/Entrepreneurs-and-VCs-say-Midwest-and-rural-regions-lack-venture-infrastructure-witnesses-urge-easier-fund-formation-and-local-investor-engagement","mediaUrl","https://secure.pipeline.soar.com/6303798-8b7ecde1f951842d0dcf1c529a20aa8a/orig.mp4?Expires=1771115277&Signature=PFX-rdXrwDwI9~PMO1mblEJfN-EzXh6SFqmupf3RnEi-6M-T7lWyVYIKFyCrbWDTlGrR5AAzhxg05clxeJAL7I7zM~puaUDB-bR-zNdsScsqDpR7yW~Zuxn7-6GJYZj0HD2EUhDrzb-vbrjk9SD3S-I7rCEQI4qRSzKeG3Iw4HOcmZHVmP5qMjxZ6YkbwVxmO81ccG3wEk1BV5mIW6F8BY-3OH~v044UGT-STOUTGk1rEjxWbvN94sBxRW-0sfPL1ueeLCIkx4CgnB7~YrStI8s~LVSLfGgom5AcFzvk-IdUi4K-isp-XFOVchdFlfuFeKej5HlbAjTPF5tcIx-wBg__&Key-Pair-Id=KUT5TJCACFTXG","author","U.S. House Committee on Financial Services","date","2025-02-27T05:32:31Z","article","Witnesses who founded and run startups and regional venture funds described persistent capital gaps for entrepreneurs in the Midwest and other noncoastal regions, and suggested policy and private-sector steps to close them.

Andrew Barnell, CEO of Genoscopy in St. Louis, said raising early rounds from outside traditional venture hubs was difficult: “there are only a handful of early stage venture firms” in St. Louis, he testified, and investors “like to invest in their own backyard.” Barnell said easing formation of venture funds, reconsidering accredited-investor rules, and expanding crowdfunding would help Midwestern startups attract capital earlier.

McKeever Conwell, founder of Rare Breed Ventures, described using Rule 506(c) and an amendment to section 3(c)(1) of the Investment Company Act to accept many small checks; he said that change allowed him to secure 194 investors, 83.5% of whom put up $50,000 or less. Conwell observed that current limits — including LP-count caps that rise at certain fund-size thresholds — effectively force minimum checks to increase and exclude many small investors from follow-on funds.

Members and witnesses discussed practical remedies: tax incentives for local angel investing, state-level incubator support, extending Reg CF/Reg A improvements to improve local access, and easing legal friction for small fund formation. No formal legislative action occurred; members asked for written suggestions and stakeholder input.","mediaType","Video","parentTitle","From a Dream to IPO: Expanding Avenues to Obtain Capital for American Companies (EventID=117933)","oneSentenceSummary","Founders and early-stage investors described how limited local VC infrastructure and high fund minimums impede capital formation outside major hubs; witnesses proposed making it easier to form venture funds, lowering minimums and educating local investors.","taxTitle","Financial Services: House Committee, Standing Committees - House & Senate, Congressional Hearings Compilation, Legislative, Federal","taxId",1981,"location","","headline","shortSummary",{"_33":76,"_35":36,"_37":38,"_39":77,"_41":78,"_43":79,"_45":80,"_47":81,"_49":82,"_51":83,"_53":84,"_55":56,"_57":58,"_59":85,"_61":62,"_63":64,"_65":86,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6303803,"Industry warns AFFE disclosure treatment pushed institutional dollars away from BDCs",149,8436000,8585000,"/Search/View?dp=1&key=2470660-8e3afc7bfa7aae15f2d9a98e096a5613&start=8436&end=8585","https://assets.pipeline.soar.com/2470660-8e3afc7bfa7aae15f2d9a98e096a5613/thumbnail_8436000.jpg","/articles/6303803/Industry-warns-AFFE-disclosure-treatment-pushed-institutional-dollars-away-from-BDCs","https://secure.pipeline.soar.com/6303803-865673be97a25a49056da832ecbeb188/orig.mp4?Expires=1771115277&Signature=LPlhKPpmRduAm-GnxfbZu9AMNrqcSrI~e~tLNq4PuG2jljUI9dp0kPPf9TEUENSg~2LFTTFjc0ylq7MYk8CbkOb~gwuq7S94OM94KBlFxOJIG8Ys3BiPvxQhNlmF2CAszLXFyj9jWrv-hjHpk1nl57~qEn6HUiVgu8IJ3x~Zwq~OPkgvJvnHcBfqrpyl-4vkyhktRtm39ImQq7LJwA72Fqc0i6VfYdkb8wvJhBiXP4KOu906kYRZn5nXs5e143~uFiIaDpUoU~F0BdhBeey3XXq-cCZmOp4RejCU7ahgGnsy~QN7hTX~dwr6fXv4AZBiesd8ehp6KLguRSsxs4W7nw__&Key-Pair-Id=KUT5TJCACFTXG","Several members raised concerns that the SEC’s treatment of acquired fund fees and expenses (AFFE) has distorted the public presentation of BDC fees and led to index exclusion and institutional outflows.

Representative Gabarino and other members cited testimony from Anna Pinedo explaining that the AFFE presentation—required under a 2006 SEC policy—produced an inflated-looking fee table for many BDCs. Pinedo said the change led to BDCs falling out of some indices and to institutional investors moving away from BDCs, reducing capital flows to small and mid-size businesses that BDCs finance.

Pinedo told the subcommittee reversing the AFFE policy and modernizing regulation for BDCs and other regulated funds could restore investor interest and improve capital formation for middle-market companies. Members discussed legislation in prior Congresses aimed at correcting AFFE-related distortions and said they would continue evaluating statutory and SEC options.

No formal action was taken; members requested additional written materials for the record.","Witnesses and members discussed how the SEC's acquired fund fees and expenses (AFFE) presentation affected business development companies (BDCs), indexes and institutional investment flows, and urged statutory or administrative fixes.",{"_33":88,"_35":36,"_37":38,"_39":89,"_41":90,"_43":91,"_45":92,"_47":93,"_49":94,"_51":95,"_53":96,"_55":56,"_57":58,"_59":97,"_61":62,"_63":64,"_65":98,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6303808,"Members cite high compliance costs, urge IPO on-ramp and right-sized disclosures for smaller public companies",1686,1828000,3514000,"/Search/View?dp=1&key=2470660-8e3afc7bfa7aae15f2d9a98e096a5613&start=1828&end=3514","https://assets.pipeline.soar.com/2470660-8e3afc7bfa7aae15f2d9a98e096a5613/thumbnail_1828000.jpg","/articles/6303808/Members-cite-high-compliance-costs-urge-IPO-on-ramp-and-right-sized-disclosures-for-smaller-public-companies","https://secure.pipeline.soar.com/6303808-62686b2097de907f0eb745897d9df429/orig.mp4?Expires=1771115277&Signature=MfruxDqooWjyZLSsC0RE-2sLtjWvdroVehZ6GUoAD6pLbhgu9JSHs~GOOWVQq75W--jKtxkSY-wLtxta2f1kRGmO1fYUhskhAiahuqM3W2t0-Afla0IX58zs9dX5GgvrGKvxR22sMQ~jC8~oI~m2l7fsu4QNuG0umY-ysmExKlDrbQ-hpBtdVNtM~fCXmtj9qOB~WTIVc2POAluWTYaQyfFQvSXugQrAn3xu-3CLoFkQPxirgIwrQE~glhXcalLdHGXKqF0GYD9SM18dtC~ih3cmCg1j2WP2aa7NFtzX~~QKo04Hz9nYI8z6vtPDQ0nvXyNk6tlQ6aAt1IHlwsiEHg__&Key-Pair-Id=KUT5TJCACFTXG","Committee members and witnesses debated whether regulatory and compliance costs have made public markets too expensive for small and medium-sized companies and discussed policy changes to reduce that burden.

Anna Pinedo, securities partner at Mayer Brown, told the panel that the shift away from IPOs reflects market-structure changes and higher disclosure costs since Sarbanes-Oxley and Dodd-Frank. Pinedo described how smaller public companies often “bear the cost of being public, but they're not reaping the benefits” such as analyst coverage and secondary-market liquidity.

Representative Hill questioned whether the SEC’s prior cost estimates are out of date; Pinedo agreed and cited SEC Office of Advocate for Small Business work showing higher going-public costs than older figures. Pinedo supported extending the IPO “on-ramp” for emerging growth companies and right-sizing disclosure and compliance burdens for smaller reporting companies.

Members discussed specific levers: adjusting thresholds for smaller-reporting-company status, SOX 404 attestation relief for low-revenue issuers, and incentives to restore equity research coverage and market-making for small caps. Witnesses stressed that successful reforms should preserve investor protections while lowering unnecessary compliance costs for firms that want to be public.

The subcommittee did not vote; members said legislative options and SEC engagement would follow the hearing record.","Members and witnesses discussed rising costs of public listing and compliance, the decline in public-company counts, and possible steps — including extending IPO on-ramps and reexamining SOX burdens — to make public markets more attractive for smaller firms.",{"_33":100,"_35":36,"_37":38,"_39":101,"_41":102,"_43":103,"_45":104,"_47":105,"_49":106,"_51":107,"_53":108,"_55":56,"_57":58,"_59":109,"_61":62,"_63":64,"_65":110,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6303813,"Witnesses urge raising Reg CF cap, removing Reg A limit to expand online capital formation",348,2698000,3046000,"/Search/View?dp=1&key=2470660-8e3afc7bfa7aae15f2d9a98e096a5613&start=2698&end=3046","https://assets.pipeline.soar.com/2470660-8e3afc7bfa7aae15f2d9a98e096a5613/thumbnail_2698000.jpg","/articles/6303813/Witnesses-urge-raising-Reg-CF-cap-removing-Reg-A-limit-to-expand-online-capital-formation","https://secure.pipeline.soar.com/6303813-8b5e47eca2178ae1dcda6dff70c33f0e/orig.mp4?Expires=1771115277&Signature=Qkx-Q7JFT1D6Z8kcXVhEY7InD4x0Qey~SdtmW9Pv9dXT74C-nJNOJVoaC-DG1aM4eDDALRxa5vqY0~k94fvcQKLHvrZUhovw4npgJGNHiteNo5~81Fl5hD2id7N5LGiDB4P-IrrV1iq-oeE0NA845NBDiCaS8uwF~aLmAOJAytwpJzIfJK640uDkEm7cmJ6gNU5ID68D3m49tLHULbaFcKNKuN2hb7br9x-x0NSne36368uvpZOQmdfLI2sN66EOYJ1Xatqsmh3g2VO~MNZ9-oeYHhw55e3X5EvSKg3i~jgaISTLfOIKOrbWfj0Qaf3LI60r~oMFXAhRR03ww49lUw__&Key-Pair-Id=KUT5TJCACFTXG","Witnesses testifying at the Subcommittee on Capital Markets urged Congress to update limits on online exemptions and to harmonize rules so more companies can raise capital through Reg CF and Reg A.

Rebecca Kasaba, CEO and cofounder of DealMaker, told the committee her platform has facilitated roughly $2 billion in raises for about 900 American companies and urged three main reforms: remove the $75 million cap on Reg A offerings, increase the Reg CF limit from $5 million to $10 million, and harmonize Reg CF and Reg A rules for marketing and reporting. Kasaba said removing the Reg A cap would “bring unregulated capital formation activities into a regulated space.”

Kasaba and other witnesses said raising the Reg CF limit has precedent: the 2020 increase from $1.25 million to $5 million produced a 250% market boost, she testified. She argued that harmonized, standardized disclosures make Reg CF accessible and that “more junior investors can become more sophisticated because every deal they look at, there's the same format.”

McKeever Conwell, founder of Rare Breed Ventures, described using Rule 506(c) and the 3(c)(1) amendment that let smaller funds solicit investors and raise from larger pools of smaller checks; he said those changes enabled him to have 1,128 meetings in his first 90 days and ultimately 194 investors in his fund, 83.5% of whom invested $50,000 or less.

Democratic members and some witnesses cautioned that expanding participation must be paired with investor protections. Alexandra Thornton said expanding private-market access “without providing accurate information about operations, management risks, and financial position” increases risk for nonprofessional investors.

The hearing did not result in votes. Members signaled an intent to consider bills that would raise caps, harmonize exemptions, and consider marketing rules; stakeholders were asked to submit written comments for the record.","DealMaker and other witnesses told the subcommittee that raising offering caps and harmonizing Reg A and Reg CF rules would let more communities participate in capital formation while proponents argued standardized disclosures already provide protections for smaller investors.",{"_33":112,"_35":36,"_37":38,"_39":113,"_41":114,"_43":115,"_45":116,"_47":117,"_49":118,"_51":119,"_53":120,"_55":56,"_57":58,"_59":121,"_61":62,"_63":64,"_65":122,"_67":68,"_69":70,"_71":72,"_73":72,"_74":72},6303817,"House capital-markets hearing sharpens debate over who qualifies as an accredited investor",2416,1376000,3792000,"/Search/View?dp=1&key=2470660-8e3afc7bfa7aae15f2d9a98e096a5613&start=1376&end=3792","https://assets.pipeline.soar.com/2470660-8e3afc7bfa7aae15f2d9a98e096a5613/thumbnail_1376000.jpg","/articles/6303817/House-capital-markets-hearing-sharpens-debate-over-who-qualifies-as-an-accredited-investor","https://secure.pipeline.soar.com/6303817-3fdbf0566fde2385d550ba9cb5ac0bbe/orig.mp4?Expires=1771115277&Signature=LRuSKZQej~YLXs1H4sBog327phCwNgcc5hnE~sFVTgPmZL0KcbFdNjil6BkzRqWh4c-MepSB2gNW35mQV9MVrnXnITA2SjJTUY9o7F~ryDw-XLk7rL0R5GZRGI~eAaA4pjKpjg1VXjzaAIxoYNjOkGnXJNkbqmbbUfle-THLGUNJUCCUwxtTOmd5nMd4Vz~w~eqHs1-3YGR2cTu9AKOH90G66fUsWG0vY~x0CmaG-vQqsTgMOt2Xd1ymlPL6fxi7RSaYwNeszLHEfS5TwjYpWAKP2q6xCm4vaIoY9-ZKAFIBF19HeXoapvoU7Fn4Ou1ifCkk8z62~hfxwhPKEbx~yw__&Key-Pair-Id=KUT5TJCACFTXG","Chairwoman Wagner called the Subcommittee on Capital Markets to discuss “strengthening public and private markets by increasing investor access and facilitating capital formation.” The hearing featured five witnesses and extensive questioning about whether the accredited investor definition should be revised to allow more Americans to invest in private offerings.

The central dispute was whether accreditation should be based primarily on wealth and income or on financial knowledge and limits on how much an investor can lose. Ranking Member Sherman argued the statutory thresholds are long out of date and urged changing the definition to reflect knowledge and loss-absorption capacity. Sherman said, “The idea that somebody is high income because they have $200,000 … a million dollars does not make you wealthy in the current system.”

Witnesses offered contrasting views. Anna Pinedo, a securities partner at Mayer Brown, supported modernizing accreditation to recognize professional qualifications and other measures of financial sophistication, suggesting alternatives such as advising by registered broker-dealers or passing a test. Alexandra Thornton of the Center for American Progress urged caution, saying broadening access without mandated disclosure “is increasing risks for more investors and tilting the bargain in favor of the private party seeking capital.” Thornton cautioned that many private offerings provide little or no standardized information to potential investors.

Several members stressed trade-offs. Representative Hill and others said regulatory burdens and compliance costs have driven companies away from public markets and argued expanded private-market access can spur job creation. Democrats including Representative Waters and other witnesses emphasized investor protection and robust SEC enforcement as necessary safeguards.

Discussion also covered possible hybrid approaches: limiting the percentage of a household’s net worth that can be invested in private offerings, recognizing professional credentials, or requiring independent advisers for nonwealth-based accreditation. Witnesses and members repeatedly returned to the need for both greater access to capital for startups and protections that ensure retail investors retain adequate information and liability limits.

The subcommittee directed stakeholders to submit written feedback in the days after the hearing; no bills were voted on during the session.

Looking ahead, members said they plan to consider legislative options that combine expanded access with new disclosure or suitability safeguards. The chair announced an outreach period for stakeholder input and set a deadline for written follow-ups in the hearing record.","Members of the House Subcommittee on Capital Markets and witnesses debated proposals to broaden who may invest in private markets, with Republicans urging looser wealth thresholds and Democrats and consumer advocates warning of increased investor risk without stronger disclosure.","actionData","errors"]

Article not found

Entrepreneurs and VCs say Midwest and rural regions lack venture infrastructure; witnesses urge easier fund formation and local investor engagement

Industry warns AFFE disclosure treatment pushed institutional dollars away from BDCs

Members cite high compliance costs, urge IPO on-ramp and right-sized disclosures for smaller public companies

Witnesses urge raising Reg CF cap, removing Reg A limit to expand online capital formation

House capital-markets hearing sharpens debate over who qualifies as an accredited investor