Washington, D.C. - Yesterday, Congressman Tom Emmer participated in the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets hearing titled, “Going Public: SPACs, Direct Listings, Public Offerings, and the Need for Investor Protections.”
During this hearing, Congressman Emmer spoke about the importance for the capital market structure to meet the needs of American companies, regardless of size or type, so Main Street investors don’t lose out. Due to regulatory hurdles, more businesses remain privately funded instead of going public, and the decline in initial public offerings, or IPOs, hurts everyday American investors.
Emmer also announced his intention to re-introduce the Main Street Growth Act, which allows the SEC to provide for the creation of venture exchanges that offer streamlined regulation and strong investor protections. Venture exchanges will help innovative, emerging growth companies gain access to capital, create jobs, and help the economy rebound.
Watch Rep. Emmer's remarks here.
"Participation in the IPO process has significantly slowed over several years. The number of IPOs declined more than 63% from the 1990s to the 2000s and has stayed flat up to 2020. What is interesting is that, at the same time, the United States has doubled the regulatory compliance costs a business has to take on for going public in a traditional IPO.
It costs an average of $2.5 million for a company to achieve initial regulatory compliance for going public, and an additional $1.5 million annually thereafter. These are SEC estimates.
This is just not feasible for our small and emerging growth companies. These businesses are turning to more streamlined approaches to access capital, like SPACs, direct listings, or even staying private. An overburdensome IPO process hurts American consumers by limiting their access to the markets and ensuring that only institutional investors can invest in these innovative, emerging growth companies. It is critical that our capital market structure meets the needs of American companies, regardless of size or type.
I am excited to soon reintroduce my bill, the Main Street Growth Act, which passed out of the House in the 115th Congress and passed out of this Committee unanimously, thanks to my colleagues on the other side of the aisle – many of whom are present with us today. This bill will allow the SEC to provide for the creation of venture exchanges. These specialized securities exchanges offer streamlined regulation and strong investor protections, which will help small and emerging growth companies gain access to capital, create jobs, and help the economy rebound."