Good morning, it is a pleasure to be with you virtually today at the committee’s May meeting.  In 1992, Congress enacted a law designating the month of May as Asian/Pacific American Heritage Month.[1]  Thus, today’s agenda for the committee is particularly appropriate, given the deep connection between the Asian American and Pacific Islander (AAPI) community and small businesses.  According to the U.S. Small Business Administration, there were nearly three million AAPI-owned businesses in 2019.[2]  These businesses employed around five million people and generated nearly $990 billion in sales.[3] 

First generation immigrants, like those in the AAPI community, often face limited opportunities to find meaningful employment. Yet, they may have significant entrepreneurial spirit. I have personal experience working in such a business. My first job as a teenager was working for my grandfather’s family business in Southern California. Driving a small truck, he would deliver produce to restaurants and retailers from the wholesale market. Through persistence and hard work, he accomplished the American dream. This story of the immigrant family business has been repeated countless times and become an important cornerstone within the AAPI community. The struggle of such entrepreneurs has played a role in shaping my views on the regulatory environment for start-up capital. 

Today, the committee will discuss two topics within start-up capital – Regulation Crowdfunding (“Reg. CF”) and angel investors. As directed by the JOBS Act,[4] the Commission adopted Reg. CF in October 2015.[5] As a member of the Commission staff, I worked on both the proposal and final adoption of Reg. CF. Jenny Riegel, Amy Reischauer, and Julie Davis, who now work closely with this committee, also worked on the adoption.

Nearly nine years later, we can evaluate whether crowdfunding has achieved its intended goal of “provid[ing] startups and small businesses with capital by making relatively low dollar offerings of securities…less costly.”[6] According to the latest annual report from the Office of the Advocate for Small Business Capital Formation, Reg. CF “has been particularly attractive to small businesses located outside of traditional capital hubs.”[7] Professor Melody Chang, who will be the speaker for the Reg. CF session, suggests that there may be “a potential lack of awareness among [women and minority-led startups] about the opportunities presented by [Reg. CF].”[8] I look forward to hearing a readout of the committee’s discussion of Reg. CF’s opportunities and challenges as a method of early-stage capital raising.

The second topic will be angel investing. I recently had the pleasure of visiting a start-up company in Miami and met with its founder and her angel investors. They emphasized the gap in available capital for small companies that have outgrown what can be raised from friends and family, but are below the investment size of a venture capital fund. The start-up nature of the business often means that bank financing is also not an option. While angel investing is not for everyone, I am in interested in further learning the extent to which angel investing can play a role in facilitating capital formation.

Finally, I would like to congratulate this committee for issuing its recommendations on the “accredited investor” definition last week.[9] These were the first official recommendations since the committee was largely reconstituted last June. I look forward to further recommendations from this committee.

Thank you, and I hope that you have a productive meeting.