SEC Publishes Data on Regulation A, Crowdfunding Offerings, and Private Fund Beneficial Ownership Concentration

Understanding Capital Formation in Emerging Markets

The U.S. Securities and Exchange Commission (SEC) has released three in-depth research reports through its Division of Economic and Risk Analysis (DERA) that shed light on how capital is raised in the United States, particularly among smaller issuers and private funds. These reports analyze trends in Regulation A offerings, crowdfunding under the JOBS Act, and beneficial ownership concentration in hedge funds, offering critical transparency into capital markets and private fund dynamics.

Key Findings from the SEC’s Latest Reports

Regulation A Offerings: A Decade of Capital Raising Activity

DERA’s first report, A Decade of Regulation A, highlights how small companies have leveraged the Regulation A exemption to raise capital from the public. Covering activity from 2015 through 2024, the data illustrates a growing reliance on this exemption by emerging businesses:

• Over 1,400 offerings were launched, seeking more than $28 billion in aggregate capital.

• More than 800 issuers successfully reported proceeds, totaling approximately $9.4 billion.

• A typical Regulation A issuer was small, relatively young, and frequently not yet profitable.

• Many issuers had limited operational history, positioning Regulation A as a key tool for startups seeking public investment without undergoing the full SEC registration process.

This report underscores the role of Regulation A in democratizing access to capital while enabling investor participation in early-stage growth companies that were traditionally inaccessible through public markets.

Crowdfunding Under the JOBS Act: Empowering Early-Stage Entrepreneurs

The second report provides a comprehensive analysis of Title III crowdfunding between May 16, 2016 (the effective date of Regulation Crowdfunding), and December 31, 2024. This mechanism was designed to allow startups and small businesses to raise funds from retail investors online through SEC-registered portals.

Key takeaways include:

• Over 8,400 offerings initiated by more than 7,100 issuers.

• While initial offerings targeted $560 million, most used a minimum-maximum format allowing oversubscriptions.

• The maximum capital sought across all offerings approached $8.4 billion.

• Reported proceeds totaled around $1.3 billion from more than 3,800 offerings as captured through EDGAR filings.

Crowdfunding continues to gain momentum and serves as a vital financial lifeline for microenterprises. The median issuer profile reveals:

• $80,000 in total assets, including $13,000 in cash.

• $60,000 in debt and $10,000 in annual revenue.

• A lean workforce, averaging three employees.

These statistics reflect the grassroots nature of crowdfunding, often supporting first-time capital seekers unable to qualify for traditional financing or venture investment.

Hedge Fund Beneficial Ownership: The Impact of Investor Concentration

The third report, Beneficial Ownership Concentration and Fund Outcomes for Qualifying Hedge Funds, provides a rare analytical window into the structure and performance of hedge funds based on investor concentration from 2013 to 2023.

This study examined the relationship between ownership concentration and key fund performance metrics across the hedge fund sector. Among its core insights:

• Funds with concentrated ownership grew faster than those with diversified investor bases.

• These funds tended to hold more liquid portfolios and provided greater investor liquidity, though overall liquidity levels declined throughout the study period.

• Unconcentrated funds achieved 1.2% higher gross returns compared to concentrated funds.

• However, this advantage diminished after fees: net returns were only 0.1% higher, suggesting higher costs offset performance gains in less concentrated funds.

This analysis highlights how ownership structure influences fund strategy and liquidity and offers both investors and regulators a quantitative foundation for assessing risk and efficiency in private fund markets.

The Role of DERA in Market Transparency

The SEC’s Division of Economic and Risk Analysis plays a central role in enhancing transparency in U.S. capital markets. By integrating data science and financial economics, DERA supports the Commission’s broader mission to protect investors, maintain fair markets, and promote capital formation.

As Acting Chief Economist Robert Fisher noted, “Today’s reports provide key information on the capital markets. Understanding how capital is being raised and the interaction of ownership concentration with fund outcomes for private funds informs not only the Commission but the public about essential parts of our markets.”

These new publications reflect the SEC’s commitment to market integrity and investor education, especially in alternative and emerging capital formation pathways. With detailed analytics and deep insights, these reports empower policymakers, investors, and issuers with data-driven perspectives on evolving market trends.

SEC Press Release

Representing Advisors and Investors, Nationwide.