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The Equity Capital Formation (ECF) Task Force, a group comprised of individuals from across the country’s startup and small-capitalization company ecosystems, today presented a comprehensive report to the U.S. Department of the Treasury containing a series of recommendations to enhance market structure for small-cap companies as a means to increase the potential for job creation and growth. A copy of the complete report can be accessed at:
In the report, titled “From the On-Ramp to the Freeway: Refueling Job Creation and Growth by Reconnecting Investors with Small-Cap Companies,” the ECF Task Force highlights that the significant decline in the number of small-cap IPOs has stifled both U.S. job growth and fundamental research and development in breakthrough technologies. Economic and regulatory changes to the capital markets have made it difficult and cost-prohibitive for small-cap companies to go public and raise the growth capital they need to increase their employee base and continue to invest in R&D. The success of the JOBS Act as a balanced, thoughtful piece of legislation that promotes equity capital formation enables market participants and policy-makers to now address some of the remaining barriers in accessing growth capital faced not only by small private companies but also by many small-cap companies that are already public.
Jeffrey Solomon, Co-Chair of the ECF Task Force and Chief Executive Officer of Cowen and Company said, “We currently have a one-size fits all capital markets ecosystem that makes capital formation for small-cap companies very difficult. Today’s small-cap stocks have low trading liquidity, little institutional ownership and support and, as a result, it is difficult for these companies to raise the capital they need to hire employees, increase their product research and development, and ultimately grow their share prices. In addition, we are also calling for the implementation of the Reg A+ rules in Title IV of the JOBS Act.”