When the SEC asked participants at its annual Small Business Forum which issue has the greatest impact on capital raising, thenumber one response was the accredited investor definition. But not in a good way.
That’s because individual investors who did not meet specific income or net worth tests were not considered ‘accredited’ and were denied the opportunity to invest in private offerings from small and growing businesses. This made it difficult for fledgling businesses in regions with fewer high net worth individuals to find potential investors—having a particularly large impact on minority- and woman-owned businesses.
After receiving feedback from market participants, the SEC recently expanded the accredited investor definition. Wealth is no longer the only test of an investor’s qualification to invest in private offerings, giving a boost to small and emerging companies.
If you missed the 2020 Small Business Forum, the annual report is now available. Full of quotes, insights, and recommendations from this year’s event, this is not a stereotypical government report. And to learn more about the SEC’s work to help small businesses year-round, check out the SEC’s Office of the Advocate for Small Business Capital Formation.