A new report from the staff of the Security and Exchange Commission’s Office of the Advocate for Small Business Capital Formation (OASBCF) identified tools, strategies and approaches to increase the flow of capital between investors and small businesses.
On Thursday, the 2025 staff report was presented to Congress and provided a comprehensive and data-rich resource on capital-raising dynamics nationwide. According to the report, data from three company stages provides a picture of what is happening in the small business marketplace. Officials said the report also highlights the past year’s work of the OASBCF to advance the interests of small businesses and their investors at the SEC and in the capital markets.
The report found that success for small business capital formation is not random but is based on data and can be tracked based on the company’s stage within its lifecycle. The data is segmented company size and age, as in small and emerging businesses, mature and later-stage businesses, initial public offerings and small public companies. Information in the report was gleaned from interactions by staff with businesses across the country.
“The insight we gain from our events and conversations with small business marketplace participants provides timely, practical feedback to inform the Commission’s policymaking as well as the Office’s further outreach and educational efforts,” the report said.
For small and emerging businesses, the cost of starting a business often prevents entrepreneurs from realizing their goals of business formation as they often may not fit the typical target of venture capital fund investments. The report said 94 percent of small businesses experienced financial challenges in 2024, including paying operating expenses, uneven cash flow and rising costs of goods and services. Eighty-one percent of small business owners who applied for a loan found it difficult to access affordable capital, and 40 percent sought less than $50,000 in capital. Entrepreneurs said access to capital was the number one obstacle limiting growth for their business.
The report said entrepreneurial support organizations, such as accelerators, would benefit the larger ecosystem by helping smaller businesses and entrepreneurs access the capital they need to grow and become more successful.