Bill Overview
Title: SEED Act of 2022
Description: This bill creates an exemption to securities registration requirements for a micro-offering of securities. In general, the Securities and Exchange Commission (SEC) prohibits the offering or selling of securities unless the offering is registered with the SEC or it qualifies for an exemption. The bill defines a micro-offering as an aggregate amount of securities sold by an issuer that does not exceed $500,000 in a 12-month period. This exemption does not apply to issuers who are convicted of specified financial crimes or are subject to specified disciplinary actions.
Sponsors: Sen. Scott, Tim [R-SC]
Target Audience
Population: Small business owners and entrepreneurs, primarily those seeking to raise capital through securities offerings
Estimated Size: 3170000
- The SEED Act of 2022 focuses on providing an exemption from securities registration for micro-offerings, directly affecting small businesses and entrepreneurs who need to raise capital through securities offerings without the burden of SEC registration.
- Small businesses often face challenges in accessing capital due to regulatory requirements. By allowing up to $500,000 in securities sales without registration, these businesses can have more opportunities for funding.
- This act specifically targets businesses that are not involved in financial crimes or under disciplinary actions, ensuring that only those with clear records can benefit.
- There are approximately 31.7 million small businesses in the U.S. as of recent data, though not all of these would engage in securities offerings. The act primarily benefits those seeking financing through such offerings.
- Globally, the number of small businesses is much larger, especially in developing countries where access to capital is more restricted.
Reasoning
- The SEED Act of 2022 is designed to help small business owners and entrepreneurs by providing an exemption from securities registration for micro-offerings. This will primarily benefit those who need to raise capital up to $500,000 in a 12-month period without the legal and financial burdens of SEC registration.
- The target population is primarily entrepreneurs and small business owners looking to grow their businesses and who would benefit from easier access to capital markets.
- The budget limitations mean not all small businesses can benefit immediately, but it provides significant opportunities for those agile enough to take advantage of the offering.
- Not every small business will engage in securities offerings, as many may continue to rely on traditional funding methods. Those looking for rapid expansion or needing equity investment are more likely to utilize this policy.
Simulated Interviews
Small Business Owner - Tech Start-up (Austin, TX)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- The SEED Act seems like a great opportunity for my business to raise additional funds without huge regulatory costs.
- I think this will let us focus more on innovation rather than compliance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Franchise Owner - Food Industry (Nashville, TN)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- This policy could provide a simple means to explore expansions without jumping through so many hoops.
- I don't see immediate use as I'm more inclined to traditional financing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 6 | 6 |
Entrepreneur - Biotech (San Francisco, CA)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- The SEED Act can help reduce initial costs when starting to issue shares to early investors.
- I think this makes biotech start-ups more viable with less back-end friction.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 7 |
Retail Store Owner (Cleveland, OH)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I'm interested in understanding more about how this can help us expand.
- I've not explored securities before, and this could open new doors if educated correctly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Financial Consultant (New York, NY)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- It's a positive step forward, making it easier for clients to seek alternative funding routes.
- Might see increased demand for consulting services as businesses navigate this new offering.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Retired Accountant and Volunteer (Portland, OR)
Age: 62 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 10/20
Statement of Opinion:
- While I don't directly benefit, the community could see positive effects from strengthened local entrepreneurship.
- Will incorporate information about this act into my workshops.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Small Scale Investor (Miami, FL)
Age: 31 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 6/20
Statement of Opinion:
- This act could increase investment opportunities in smaller, untapped markets.
- It will help even the playing field for smaller investors like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Owner - Eco-friendly Products Store (Albuquerque, NM)
Age: 53 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 6.0 years
Commonness: 10/20
Statement of Opinion:
- Access to more capital without heavy fees is crucial for expanding my product line.
- The act simplifies one of the most daunting aspects of business growth.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Tech Entrepreneur (Seattle, WA)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- Being a non-profit, this act doesn't directly apply to us, but understanding it broadens our financial strategy options.
- Helps in planning potential for-profit branches for future funding.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Entertainment Industry Freelancer and Small Business Owner (Los Angeles, CA)
Age: 37 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 8/20
Statement of Opinion:
- Reducing paperwork and legal fees associated with raising funds could significantly benefit my expansion plans.
- Planning to consult a lawyer to understand this better.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $20000000 (Low: $15000000, High: $25000000)
Year 2: $20000000 (Low: $15000000, High: $25000000)
Year 3: $20000000 (Low: $15000000, High: $25000000)
Year 5: $20000000 (Low: $15000000, High: $25000000)
Year 10: $20000000 (Low: $15000000, High: $25000000)
Year 100: $20000000 (Low: $15000000, High: $25000000)
Key Considerations
- The act primarily aids small businesses, which may result in increased economic dynamism and job creation in small business sectors.
- Potential risk of fraud or misuse as oversight requirements are lessened, needing extra vigilance.
- State securities regulators might require more resources for oversight.
- Limited direct impact on federal revenue from registration fees given the magnitude and scope of exemptions.