Investing in America: How Private Equity Empowers Main Street (House Small Business subcommittee hearing, June 5, 2025)
Summary
Transcript of a June 5, 2025 hearing of the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access, Small Business Committee Document Number 119-013, on private equity investment in small firms. Chairwoman Beth Van Duyne presided from 10:00 a.m., and LaMonica McIver gave the minority opening statement. Witnesses were Jordan Bastable of LongWater in Dallas, Sarah Fields of Jetta Corporation in Edmond, Oklahoma and Senofer E. Mendoza of Mendoza Ventures in Brookline. Added material includes a New York Times letter and a UnionLeader letter.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Investing in America: How Private Equity Empowers Main Street (House Small Business subcommittee hearing, June 5, 2025).”
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INVESTING IN AMERICA: HOW PRIVATE EQUITY
EMPOWERS MAIN STREET
HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC GROWTH,
TAX, AND CAPITAL ACCESS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
HEARING HELD
JUNE 5, 2025
Small Business Committee Document Number 119–013
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
60–591 WASHINGTON : 2025
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HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
NICK LALOTA, New York
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
TROY DOWNING, Montana
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
JIMMY PATRONIS, Florida
NYDIA VELÁZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
HERB CONAWAY, New Jersey
MAGGIE GOODLANDER, New Hampshire
LAUREN HOLMES, Majority Staff Director
MELISSA JUNG, Minority Staff Director
(II)
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CONTENTS
OPENING STATEMENTS
Page
Hon. Beth Van Duyne ............................................................................................. 1
Hon. LaMonica McIver ............................................................................................ 2
WITNESSES
Mr. Jordan Bastable, Co-Founder and Managing Director, LongWater, Dallas,
TX .......................................................................................................................... 5
Ms. Sarah Fields, Chief Executive Officer, Jetta Corporation, Edmond, OK ..... 6
Ms. Senofer E. Mendoza, Founder, General Partner, Mendoza Ventures, Na-
tional Advisory Committee for Innovation and Entrepreneurship, Brookline,
MA ......................................................................................................................... 7
APPENDIX
Prepared Statements:
Mr. Jordan Bastable, Co-Founder and Managing Director, LongWater,
Dallas, TX ...................................................................................................... 23
Ms. Sarah Fields, Chief Executive Officer, Jetta Corporation, Edmond,
OK .................................................................................................................. 26
Ms. Senofer E. Mendoza, Founder, General Partner, Mendoza Ventures,
National Advisory Committee for Innovation and Entrepreneurship,
Brookline, MA ............................................................................................... 28
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
New York Times Letter .................................................................................... 38
UnionLeader Letter .......................................................................................... 43
(III)
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INVESTING IN AMERICA: HOW PRIVATE
EQUITY EMPOWERS MAIN STREET
THURSDAY, JUNE 5, 2025
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON ECONOMIC GROWTH,
TAX, AND CAPITAL ACCESS,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in Room
2360, Rayburn House Office Building, Hon. Beth Van Duyne [chair-
woman of the Subcommittee] presiding.
Present: Representatives Van Duyne, Bresnahan, McIver,
McGarvey, Latimer, Conaway, and Goodlander.
Also Present: Representatives Williams, and Wied.
Chairwoman VAN DUYNE. We are going to go ahead and open
our meeting this morning with our Chairman giving our prayer
and our Pledge.
ALL. I pledge allegiance to the Flag of the United States of
America, and to the Republic for which it stands, one nation, under
God, indivisible, with liberty and justice for all.
Chairwoman VAN DUYNE. So, good morning, everyone. I now
call the Committee on Small Business to order. And without objec-
tion, the Chair is authorized to declare a recess of the Committee
at any time. Pursuant to Committee rules, I ask unanimous con-
sent that Representative Wied be waved on to this hearing for the
purpose of asking questions. Without objection, so ordered.
I now recognize myself for my opening statement.
Well, welcome to today’s hearing, Investing in America and How
Private Equity Empowers Main Street. And first, I want to thank
our witnesses for all being here today. We know that you have
traveled a long way to share your experiences and your perspec-
tives, and we greatly value your time and your voice.
Small businesses are the foundation of our communities and the
driving force of the American economy. And whether it is a family-
run distribution center, a growing manufacturer, or a tech startup
finding its footing, these businesses are responsible for nearly two-
thirds of the new job creation in America.
In North Texas, we have seen how entrepreneurs and small fam-
ily-run businesses alike can build long-lasting enterprises and often
outcompete their larger counterparts. Today’s hearing will explore
how private equity serves as a critical tool in helping entrepreneurs
gain access to capital and enjoy the benefits of a long-term partner-
ship with investors that help them navigate challenging barriers
with expertise and key resources.
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From day one, the Trump administration has worked with con-
gressional Republicans to roll back the burdensome regulatory red
tape that for too long has blocked private capital from reaching the
businesses that need it the most. And by removing those unneces-
sary barriers, we can ensure that investors and entrepreneurs have
the ability to make crucial investment decisions in our commu-
nities.
In 2024, 85 percent of all private equity investments went to sup-
porting small businesses. And these investments are driving local
job creation, strengthening operations, and fueling business growth
to new levels. Unlike traditional funding methods, private equity
can bring more than just capital and allow businesses to scale up,
adopt new technologies, and strengthen their workforce. Across
every state and congressional district, private equity is empowering
American entrepreneurs to build and expand their businesses from
the ground up.
But for far too long, private equity has been concentrated in
places like Silicon Valley, New York, and Boston. And now cities
like Dallas and Austin are emerging as dynamic hubs for private
equity investors and those seeking investment in small businesses.
In fact, the downtown Dallas area represents one of the fastest
growing innovation and investment corridors in the country.
And I am pleased to be able to hold this hearing today to high-
light the role of private equity in the small business ecosystem and
discuss how we can bring these opportunities to more Americans
throughout the country. And thank you again for being here today
and I look forward to the conversations ahead.
I now want to recognize the distinguished Ranking Member from
New Jersey, Ms. McIver, for her opening remarks.
Mrs. MCIVER. Thank you so much, Madam Chair. Good morning
to everyone.
Small businesses are an essential part of the American economy.
They account for more than 40 percent of U.S. GDP, create ap-
proximately two-thirds of new jobs, and employ nearly half of all
private sector workers. Financing and access to credit is a central
component to starting and growing a small business. Traditionally,
small businesses have been more reliant on bank financing for
their credit needs than large businesses. But as we will explore
today, in recent years, small businesses have increasingly relied on
private forms of investment and credit to meet their financing
needs.
As we heard at previous full Committee hearing in April, the
SBA’s SBIC program is a responsible and effective method for
small businesses and startups to partner with private equity and
venture capital investors. Currently, the SBA partners with more
than 300 privately owned and managed SBICs to provide financing
to small businesses with private capital the SBIC has raised
through the SBA guarantee debenture.
As of 2024, the SBIC program has made more than 194,000 in-
vestments and deployed more than 130 billion of capital to small
businesses. More broadly, private funds like private equity, private
credit, and venture funds have become a critical component of our
small business financing ecosystem, particularly those businesses
that need retooling or just on the cusp of growth. For example, the
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private equity industry invested in 18,000 businesses in 2022, 40
percent of which had fewer than 50 employees. Likewise, in 2022,
venture capital activities surpassed the 200 billion mark, reaching
209.4 billion, making 2022 the second highest year ever for VC in-
vestment.
So while there is no doubt that the role private funds play in the
American economy and America’s small businesses is significant,
these funds can also present significant risk for small businesses,
their employees, and their communities. It is important to note
that these funds have drawn significant criticism over the years for
the strategies they at times choose to employ. And unfortunately,
like with conventional bank loans, if we look at these numbers
more deeply, the research demonstrates that women, minority-
owned, and small business outside certain geographic areas have
less access to private funds than their white-owned counterparts.
For example, Black and Hispanic female entrepreneurs receive
less than 1 percent of all venture capital investments in 2022—in
2020, excuse me. That must change. Investing in all of America’s
small businesses and startups benefit not only those businesses,
but the communities they service and our nation’s entire GDP. I
look forward to exploring all of these issues and more to ensure our
private markets are appropriately regulated, transparent, and
working for the long-term benefit of our small businesses and our
employees.
With that, Madam Chair, I yield back.
Chairwoman VAN DUYNE. Thank you very much.
I now recognize the Chairman of the full Committee from the
great state of Texas, Chairman Roger Williams for an opening
statement.
Mr. WILLIAMS. Thank you, Madam Chair. Thank you for calling
this hearing and also thank you to all the witnesses who have come
here today, especially the ones who traveled all the way from the
great state of Texas.
As a small business owner myself and an advocate for entrepre-
neurship, I have seen firsthand the critical role small businesses
play, not just as job creators, but as engines of innovation and com-
munity development. From local manufacturers to family-owned re-
tailers, small businesses drive the America’s economy. Yet too
often, these businesses face significant barriers when it comes to
securing the capital they need to grow, compete, and reinvest in
their business. So that is where private equity can play a crucial
role. When done right, it is more than just an investment. It is a
partnership in helping businesses scale up, hire more workers, and
stay competitive in a growing marketplace.
Private equity is a powerful and at times misunderstood tool in
this landscape. It can provide more than just funding. It brings
strategic support, operational expertise, and long-term partnership.
So for small businesses navigating complex markets and evolving
challenges, that kind of backing can mean the difference between
stagnation and scalable success.
Here on this Committee, it is our goal to ensure small businesses
across America compete for private investments. When private in-
vestors look at small businesses outside of the traditional coastal
elite hubs, everyone wins. Whether it is a rancher in Texas or a
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banker—or a baker in Iowa, the entrepreneurs present a prime
partnership opportunity for private equity firms.
So this is especially true in sectors critical to national security,
like manufacturing. The revitalization of American manufacturing
will ensure that American economy remains resilient. It also pre-
sents an opportunity for private investors to identify reemerging
manufacturing sectors poised for growth.
So many small businesses may be at the stage where they are
ready to seek private investment, but sometimes they may not yet
be in a position to attract private equity investments. This is where
the SBA comes into play. So just last month, I introduced H.R.
3174, the Made in America Manufacturing Finance Act of 2025, a
bill that would raise the maximum SBA loan for American manu-
facturing from 5 million to 10 million. This will not only enable ex-
isting U.S. manufacturers to grow their business, it will help bring
more manufacturing back to the U.S.
So this Committee, alongside the Trump administration and Ad-
ministrator Loeffler, will once again prioritize policies that support
Main Street America. Now we all can create an environment for
Americans where small businesses can thrive and unleash the full
potential of private equity investment.
So I want to thank again the witnesses for being here. I want
to thank my colleague Congresswoman Van Duyne for holding this
hearing, and I look forward to our conversation ahead. Thank you.
Chairwoman VAN DUYNE. Thank you very much, Mr. Chair-
man.
I will now introduce our witnesses. Our first witness here with
us today is Mr. Jordan Bastable. Mr. Bastable is the cofounder and
managing director of LongWater in Dallas, Texas. Mr. Bastable co-
founded LongWater in 2009 following years of experience as a con-
sultant with FTI Consulting and as a senior finance manager with
Lineage Power. Prior, Mr. Bastable cofounded a private investment
firm while he was still in college, while also working for a multibil-
lion-dollar million hedge fund where he gained experience in day-
to-day operations, deal flow, and investment management aspects
of running an investment firm. Mr. Bastable graduated from Texas
Christian University——
Mr. WILLIAMS. Go Frogs.
Chairwoman VAN DUYNE.—where he earned a bachelor of busi-
ness administration. Thank you for joining us today and I am look-
ing forward to our important conversation.
Our next witness here is Ms. Sarah Fields. Ms. Fields is the chief
executive officer at Jetta Corporation in Edmond, Oklahoma. Ms.
Fields joined Jetta Corporation in January of 2015 with decades of
experience in business development and marketing consumer prod-
ucts. She previously served as a senior vice president and then as
president at Century LLC. Ms. Fields graduated from Cameron
University with a bachelor of sciences in engineering technology
and earned her master’s of business administration from the Uni-
versity of Oklahoma.
And thank you for joining us today and I am looking forward to
today’s important conversation.
I will now recognize the Ranking Member from New Jersey to
briefly introduce our last witness appearing before us today.
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Mrs. MCIVER. Thank you, Madam Chair. I would like to intro-
duce Ms. Senofer Mendoza, cofounder of General Partner of Men-
doza Ventures, a Boston-based Pre C, fintech, AI, and cybersecurity
venture capital firm. After having a career in enterprise sales and
hospitality design, she began Mendoza Ventures to address the
growing funding gap in the pre-C investment stage. The firm was
launched in January of 2016 and invested in internationally in the
cybersecurity, AI, and fintech space. She is a published author, in-
novator, and thought leader in the technology startup and VC
space with a passion for equity and diversity.
Ms. Mendoza, thank you for appearing before the Subcommittee
today. We look forward to your testimony.
Thank you. I yield back.
Chairwoman VAN DUYNE. Thank you. We appreciate all of you
being here today.
And before we begin, I just want to give you just a little bit of
background. Where do we go? I want to remind you of the testi-
mony and you have 5 minutes. The Chairman is much more strict
than I am. At 5 minutes he will cut you off, but you are going to
hear me just kind of wrap a little bit at 5. So just try to hurry up
and finish your testimony and conclude it.
So I want to recognize Mr. Bastable for his 5-minute opening re-
marks.
STATEMENTS OF MR. JORDAN BASTABLE, CO-FOUNDER AND
MANAGING DIRECTOR, LONGWATER; MS. SARAH FIELDS,
CHIEF EXECUTIVE OFFICER, JETTA CORPORATION; AND MS.
SENOFER E. MENDOZA, FOUNDER, GENERAL PARTNER,
MENDOZA VENTURES, NATIONAL ADVISORY COMMITTEE
FOR INNOVATION AND ENTREPRENEURSHIP
STATEMENT OF JORDAN BASTABLE, CO-FOUNDER AND
MANAGING DIRECTOR, LONGWATER
Mr. BASTABLE. Chairman Van Duyne and Ranking Member
McIver and Members of the Subcommittee, thank you for holding
this important meeting today. It is a topic I am very passionate
about.
My name is Jordan Bastable and I am the cofounder of
LongWater Opportunities, a private investment firm focused on the
lower middle market. I also serve on the board and council chair
of the Small Business Investor Alliance, which represents funds
that invest and support the growth of small businesses across
America.
Our journey began in 2009 with two complementary perspectives:
one rooted in the experience of operating a family-run business in
rural America, grappling with succession and capital constraints;
the other is shaped by exposure to large private equity firms and
the untapped potential in unserved markets. Together we saw an
opportunity to invest in small family-owned businesses, especially
those lacking succession plans and access to institutional capital.
Our first investment, we approached over 20 banks before finally
securing financing. However, under restrictive terms. That experi-
ence revealed a larger truth: small businesses consistently face sys-
tematic barriers to growth capital and those barriers are especially
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acute in underserved markets. Today, LongWater has offices in
Fargo, St. Louis, and Dallas. We provide a range of investment so-
lutions from controlling equity to direct loans. But we are more
than capital providers. We are partners. We support our portfolio
companies with strategic guidance, operational expertise, and ac-
cess to networks they may not otherwise ever reach. We help busi-
nesses scale, professionalize, and thrive. This is not transactional,
it is relational.
Let me be clear. The idea that private equity succeeds when
businesses fail is simply false. In the lower middle market, success
comes from helping small businesses grow into larger, stronger en-
terprises that create lasting jobs and value. Let me give you an ex-
ample. We invested in a small business called Excalibur Container.
We take shipping containers and convert them to ground level of-
fices you might see at construction sites or energy sites. We came
into that business and really helped provide financial visibility for
the business, expanded benefits, instituting 401(k)’s, comprehen-
sive health care, tuition reimbursement, and programs for con-
tinuing education.
We also invested in the infrastructure, including cleaning up and
rehabbing old abandoned industrial sites and investing in new cap-
ital equipment. We also invested in modernizing their digital mar-
keting strategy and bringing skills and expertise that didn’t al-
ready exist and that they did not have the capital to invest in.
This is what aligned private capital looks like: capacity building,
local empowerment, and economic revitalization. Good public policy
should expand, not restrict, the capital options available to small
businesses. Whether it is a startup fighting for market share or a
second generation manufacturer navigating succession or a rural
enterprise facing technological disruption, private investment is
often the bridge between survival and scale. In today’s climate
where traditional financing is often constrained, private capital is
not just helpful, it is essential.
I look forward to working with the subcommittee to ensure small
businesses can access this kind of value-added capital that helps
them grow higher and succeed for the long term.
Chairwoman VAN DUYNE. Thank you very much.
I now recognize Ms. Fields for her 5 minutes opening statement.
STATEMENT OF SARAH FIELDS, CEO, JETTA CORPORATION
Ms. FIELDS. Chair Van Duyne, Ranking Member McIver, and
Members of the Subcommittee, thank you for inviting me to speak
today. My name is Sarah Fields and I serve as the CEO at Jetta
Corporation. We are a U.S.-based bathtub manufacturer and have
been business for about 45 years, located in a suburb of Oklahoma
City. We have about 60 employees and generate about $20 million
in annual revenue and we have been partnered with lower middle
market private equity firm for about 2-1/2 years. I want to share
how that partnership has truly been an accelerator for our busi-
ness, not just by providing us capital, but bringing to us expertise,
support, and the kind of involvement you may not expect from pri-
vate equity.
We partnered with a smaller, more specialized private equity
fund that focused on U.S.-based manufacturing. For them, a small
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business like us is not just one of many. We are a big deal. That
means we get direct access to senior partners, senior partners that
have manufacturing operations expertise. They help us make quick
decisions and they are people that are willing to roll up their
sleeves and come work in our business with us to help us solve
problems and move forward quickly.
Within the first year of their support, we have led to a 10 per-
cent increase in production capacity and 8 percent increase in our
efficiency thanks to major improvements we were able to make in
our factory layout and our processes. They also helped us uncover
about $350,000 in annual material savings. That is a massive
change for us and is really significant to a small business like us.
We are now reinvesting those gains in improving our workplace,
updating our facilities and workstations to improve retention.
which is critical in our manufacturing environment.
In addition, these operational improvements have made us more
competitive with much larger companies. We are now gaining mar-
ket share, improving profitability, and reinvesting in our growth.
One of the biggest advantages for private equity for us has been
access to capital for acquisition, not just having to grow organi-
cally. Without private equity, this would not have been attainable
for us. In the next six months, we plan to acquire a second manu-
facturing facility, which will allow us to expand our geographical
reach, shorten delivery times, and serve a much broader customer
base across the country.
We are also in the process of restoring the production of bathtubs
we currently import. That move will help us improve our supply
chain resiliency and quality control. It will also allow us to expand,
making more American-made products. As a result of that, we ex-
pect to be able to increase our workforce about 30 percent over the
next 18 months.
Private equity partnership for us and for me personally has been
transformative. It is helping us grow faster, operate smarter, and
create jobs, all while staying true to who we are, a small American
manufacturer, and staying true to our values and our culture.
Thank you again for allowing me to share my story. I am super
excited to be here and happy to answer any questions you may
have.
Chairwoman VAN DUYNE. Thank you very much.
The Chair now recognizes Ms. Mendoza for 5 minute opening re-
marks.
STATEMENT OF SENOFER MENDOZA, FOUNDER, GENERAL
PARTNER, MENDOZA VENTURES AND THE NATIONAL ADVI-
SORY COMMITTEE FOR INNOVATION AND ENTREPRENEUR-
SHIP (NACIE)
Ms. MENDOZA. Thank you, Chairman Van Duyne, Ranking
Member McIver, and Members of the Subcommittee for the oppor-
tunity to speak on the necessity of entrepreneurship as a corner-
stone of American competitiveness today. I am pleased to testify
today as the founder and general partner of Mendoza Ventures, a
privately held venture capital firm investing in AI, cybersecurity,
financial technology, and dual-use companies, and the founder and
executive director of Mendoza Impact, our philanthropic arm.
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My family has lived the American Dream. We are self-made en-
trepreneurs who built a venture capital fund out of a technology
exit. We live in the perspective that we are all trying to promote
fiscal responsibility, innovative technology, and employing Ameri-
cans to their absolute best capacity. Since 2016, our little fund has
deployed over $30 million into the American economy, sustained 15
portfolio companies, generated more than 550 sustainable full-time
jobs, created 140 million in revenue for our portfolio in 2024 alone,
and made essential technology for our nation’s tech stack in both
the government and the private sector. We have funded veterans,
women, and several minorities. In fact, our portfolio looks a lot like
the demographics of our great nation.
We have co-invested with some of the largest financial institu-
tions in the world and we have exited four companies, creating
generational wealth for other American families through our com-
pany. We are philanthropists who mentor the funds and founders
following our lead. This is the place where wealth is generated. Ac-
cess to the American Dream is through private equity. Over 50 per-
cent of millionaires attribute their success to the growth and scale
of a family or privately held business.
It is proven that liquidity constraints hinder access to entrepre-
neurship. If you want to send a rocket, you need to build a
launchpad. You cannot disassociate main street stability from our
nation’s entrepreneurial ecosystem. They are completely inter-
twined. Venture lives in this capital stack, creating wealth where
others won’t. And the introduction of mega funds into an industry
where the average fund size is 35 million, coupled with a slowing
IPO and M&E market, means less capital for smaller firms and
less smaller firms.
Since 2021, 25 percent of all active venture capital firms have
closed. More capital is going to fewer firms, cutting out the middle
later, and that money is not going to make it to main street. In
contrast, A16Z closed 7.2 billion and just announced a $20 billion
mega fund. Funds like us enable main street in a way that the
mega funds do not. If you’re deploying that much capital, you have
to write a larger check to get it out in the typical 5- to 10-year pe-
riod. So a startup trying to raise today, like my colleagues here, are
facing fewer firms. And venture capital is facing the same statistics
that we are seeing among the population of a growing wealth di-
vide.
Out of 91 billion deployed in Q1 of this year, 40 billion of that
went to OpenAI, another 4.5 billion went to the runner-up, An-
thropic. Now, take into account that the two funds leading those
rounds share many LPs, endowments, foundations that have in-
vested in them, and you see that we have a growing concentration
risk in the venture capital ecosystem.
In finance, when we have a really big problem, we like to call it
an opportunity. Failure is learning. And if you can fail fast, you
can learn and implement fast and beat the odds. Eric Ries fa-
mously says success is not delivering a feature. Success is learning
how to solve the customer’s problem. So the SBA has to empower
and not extract. We need to start building more launchpads in
more areas of the country in order to be able to launch more rock-
ets.
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And I will use two examples on that. One is the proposed CDFI
cuts that we are discussing today. If anything, we have not pushed
it out hard enough to really be able to meet the need of small busi-
nesses. And the other example I will use is the great SBIC pro-
gram. We went through this process and at the end of the process,
in order to partner with the fund, there is a legal bill of about 100-
to $150,000. For a seed stage fund that is an investment in an en-
tire company.
And so there is a couple of things that we can do. Instead of
making sweeping cuts, we can tweak what we have. What we have
is working. We just need to iterate on it to meet our small busi-
nesses and our smaller funds where they are today, so that they
can access it. The SBI could standardize legal docs, like Carta and
Y Combinator have put into practice. You don’t need to cut some-
thing that just needs another iteration to thrive and to help our na-
tion thrive. If we do not listen to the business owners we serve, we
are damaging our own cause.
We need to build an innovation economy in America. When that
happens, entrepreneurs everywhere have capital and opportunity.
Entrepreneurship everywhere for everyone, that is the American
Dream.
Chairwoman VAN DUYNE. Great. Thank you very much.
We will now move on to the Member questions under the 5-
minute rule, and I recognize myself for 5 minutes.
Mr. Bastable, private equity has proven to be a powerful tool for
helping small businesses grow and succeed historically. So these in-
vestments, though, that we have largely seen and concentrated in
hubs like Silicon Valley, I think that trend is finally ending. I think
in Texas 24th District alone, we have got 180 private equity-backed
businesses. Investors like yourself are looking towards businesses
in Texas. And as capital begins to shift toward emerging markets,
firms like yours are at the forefront of that transformation.
So can you speak to us about how your firm is helping bring in-
vestments into cities like Dallas and what impact that has had on
some of the small businesses that you’re working with?
Mr. BASTABLE. Yes, absolutely. Thank you for the question.
I would start by saying, you know, when you look at where our
company is based, Dallas, St. Louis, and Fargo, they are not tradi-
tional finance hubs. And even a city like Fargo, people often ask
why are you in Fargo?
Chairwoman VAN DUYNE. I was going to ask, why are you in
Fargo?
Mr. BASTABLE. Because there is great opportunities and it is
an underserved market, and it is unbelievable the number of op-
portunities that are seeking capital and just do not have access to
capital in those part of the markets. And one of the things that is
just interesting about the lower middle market is it is a relation-
ship industry. They want to work with people that are committed
to helping them grow and share the values of that long-term
growth. And so I think it is really important that these businesses
and these capital providers continue to be in the markets and the
locations where they are planning to invest and understand the
people and the values of those communities.
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Chairwoman VAN DUYNE. I used to live in Minot, North Da-
kota. At that point in time, it was long ago, it was not exactly a
hub for economic activity. We had the Air Force Base there and
that was about it. But tell me, do you have any stories of some of
these businesses that you’ve worked with, success stories, failure
stories?
Mr. BASTABLE. Absolutely. I can tell you, in North Dakota, for
example, we invested recently in a garage door manufacturer in
North Dakota. We just opened up a railcar servicing location in
rural North Dakota and are planning to open up several more. And
these are just examples of, you know, opportunities where the larg-
er private equity firms, they don’t often want to fly and travel to
these parts of the country because they are difficult to get to. And
sometimes, you know, in reality, it is hard to find and retain talent
and grow in those parts of the market. But with investments in
educating the talent and training the talent, there are really great
people in those communities who want to work at those businesses
and can drive value.
Chairwoman VAN DUYNE. Excellent. Thank you very much.
Ms. Fields, as you testified, private equity offers far more than
just capital. It provides hands-on support, strategic guidance, ex-
pertise in fields that you may not have necessarily within your own
company. It is a partnership that is between investors and the
small businesses, with each party, I think, focusing on achieving
success. We all are on the same page.
How has private equity investments helped you grow your busi-
ness? You talked a little bit about that, but I would like to hear
you expand further on areas like operations and workforce expan-
sion and whether or not you’ve been able to enter any new mar-
kets.
Ms. FIELDS. Yes, thank you for the question. And as you men-
tioned, it has been a true partnership for us, not just access to cap-
ital.
Initially, when we first were owned by private equity, the main
thing that they helped us do is quickly understand how to create
a more efficient operation. We did not have as much expertise as
we needed to understand what that meant. So for them to quickly
come in and help us understand how to re-lay out our plant, how
to make best use of the equipment that we had, not necessarily
putting all new equipment into the facility, but making sure we
were making the best use of that, and also how to make sure that
we were using a labor that we had efficiently and using the inputs
efficiently for us. That was the first thing, making sure that we
could be as efficient as possible and allow us to compete on a level
playing field.
Secondly was about reinvesting back into our people. And for us,
what that meant was making sure that we could make our work
environment more pleasant to work in. Sometimes manufacturing
can be a little bit harsh, and that makes it really hard to keep and
retain employees on the manufacturing floor. There are some
things that we really wanted to do before we had a private equity
partner to make our work environment more pleasing to work in,
and we weren’t able to. We have since been able to do that. That
has been exciting for us.
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Recently, we have expanded by taking market share and have
expanded our business about 40 percent in the state of Texas——
Chairwoman VAN DUYNE. Great.
Ms. FIELDS.—which is a large housing market. We serve the
housing market, and we are presently in a year where we are
growing about 15 percent. So we are very excited.
Chairwoman VAN DUYNE. Great. I love to hear it.
I am going to now recognize Ms. McIver for 5 minutes.
Mrs. MCIVER. Thank you so much, Chairwoman.
Mrs. Mendoza, small businesses have historically relied on two
main sources to secure funding: approaching a bank for a loan or
attracting investors. Why might a small business choose to seek in-
vestment from a private equity or a venture capital fund over a
bank loan?
Ms. MENDOZA. Revenue. I mean, they oftentimes don’t meet the
revenue requirements or the historical balance that you need in
order to be able to get the service and the terms that you require
from a bank. And so what we see is that the way that our financial
system works, you need on ramps and off ramps. So a lot of the
products that we invest in are around getting small businesses and
individuals bank ready. So what can they do to get there? And so
venture really fills that gap.
I think one of the beautiful things about this table is you have
the entire capital stack sitting here and we are all agreeing. One
of the innovative technologies that we are investing in is solving
a lot of the manufacturing issues that you have with digital twin-
ning and going all over the country and the world, making those
communication cycles much faster. Their revenue is not at the
point that they could go to a bank loan and invest deeply in that
technology to be able to get to the revenue that they need to grow.
Mrs. MCIVER. Thank you. During my opening statement, I
talked about African-American and Hispanic female entrepreneurs
and how they receive just 0.43 percent of all venture capital invest-
ment in 2020. As a venture capital investor, why do you think it
is so hard for these entrepreneurs and small business owners to ac-
cess equity finance opportunities?
Ms. MENDOZA. I think the beautiful thing about bias is it works
two ways, right? Everyone is more likely to hire someone from
wherever they are from. And our capital stack at this moment, es-
pecially in the area of venture, is really homogenous. So as you go
up into the general partnership of VC firms, there are fewer
women, there are fewer people writing the checks.
One of the reasons I started this firm was I was in corporate and
I had kids and it was hard. Like nothing illegal happened, but my
basement—you know, my desk was magically in the basement as
soon as I told them I was pregnant. And so I realized very quickly
it was not going to change unless the money was coming from
women, that we couldn’t implement the changes that we needed
unless we had a capital stack that was more reflective of our na-
tion. Fast forward a few years, we have done a lot of that.
Mrs. MCIVER. Thank you for that. For these entrepreneurs and
small business owners to receive more equity financing opportuni-
ties, there obviously needs to be more opportunities to forge impor-
tant networks with venture partners that are likely to invest with
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them. What recommendations do you have for how we here in Con-
gress can help expand these networks?
Ms. MENDOZA. I had a small business in Boston recently tell
me that workforce development and networking was the govern-
ment’s version of let them eat cake. It was Boston, so he was a lit-
tle harsh with his words. But what I think is we need to consist-
ently partner the capital and the training and the networking at
every single step of the capital stack in order to be able to scale
these businesses. I think we keep trying to legislate the quick fix
or the next thing or the thing that we can get done this year, this
session. But this is a long-term approach solution that we need to
implement over time. We have been moving in this direction for 20
years and I think we will continue moving here.
Mrs. MCIVER. Thank you for that.
Madam Chair, I yield back.
Chairwoman VAN DUYNE. Thank you very much.
The Chair now recognizes Mr. Wied from the great state of Wis-
consin for 5 minutes.
Mr. WIED. Thank you, Chairwoman Van Duyne, and thank you
to all of our witnesses for testifying here today.
Access to capital is essential for entrepreneurs to start or expand
their business. Yesterday we heard from Administrator Loeffler,
whose testimony spoke to many of the reforms the SBA has taken
over the past several months to reform federal lending programs
that were effectively torched under the previous administration.
She also testified about the deregulation efforts being undertaken
to remove the bureaucratic boot that has held down small busi-
nesses the past 4 years. And I applaud her work to reform the SBA
and make Main Street America Great Again.
Private equity represents another important way for small busi-
nesses to have the capital they need to thrive. Under the previous
administration, we saw a $1.2 trillion decline in private equity in-
vestments thanks to aggressive overregulation that led to tens of
thousands of fewer private equity investments. Fortunately for en-
trepreneurs across the country, House Republicans and President
Trump are working hard to deregulate and extend vital tax cuts for
small businesses.
Ms. Fields, thank you for your courage in being a leader, small
business owner. I give you a lot of credit. Clearly, private equity
is—they believe in you and your leadership and your character. So
thank you for all that you do.
Mr. Bastable, how is private equity helping small manufacturers
remain competitive?
Mr. BASTABLE. Yeah, it is a great question. And, you know, I
think one of the things we consistently see with small manufactur-
ers is the lack of access to innovation and new technologies that
can help them be competitive with, frankly, foreign products com-
ing into this country. And whether that is digital marketing or that
is leveraging new tools with AI or upgrading their ERP system or
automated manufacturing equipment, those are things that cost a
lot of money. And you know, at times there are—it is too much
money for those companies to invest in. And so we can come in and
really help work with the teams to implement those solutions.
Mr. WIED. Clearly a great benefit.
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Ms. Mendoza, when awarding loans to immigrants, do your com-
panies use E-Verify or other federal database to ensure the recipi-
ents of your company’s loans are in the United States here legally?
Ms. MENDOZA. So we don’t do loans. We do equity investments.
And our anchor bank is Bank of America. And so the Bank Holding
Act language is in our LPA. And so we are only investing in Fund
III out of companies domiciled in the United States. In Fund II, we
invested internationally, but it was a seed stage fund. And all of
our founders go through a typical due diligence process, like you do
when you are hiring someone, background checks, all those things.
Mr. WIED. So in the testimony provided you mentioned the sys-
tem, you know, working against certain groups of people, including
those that didn’t graduate from an Ivy League school or, you know,
who did not live in the East or the West Coast. So what is the de-
mographic breakdown of the business owners who have applied
for—applied with you, with Mendoza Ventures? Not those that
have been approved for investment, but those that have applied.
Ms. MENDOZA. Like I said, our portfolio looks like the nation.
So we have a—I think unquestionably we have a more diverse ap-
plicant pool because I am a female general partner out there doing
this work, and like attracts like. But the ones that are getting
through Investment Committee, out of 15 companies, we have 2 fe-
male founders. We have a Korean-American founder, we have
Latino founders, we have—we are lining up pretty well with the
demographics of the United States.
Mr. WIED. Okay. So a statistic on your website, which you
founded and are general partner at, says 90 percent of your loans
go to startups led by immigrants, people of color, and women. So
if 90 percent of your loans go to startups led by immigrants, people
of color, and women, despite only accounting—well, we don’t know
what the overall applicants are, would it be fair to say that you
give a preference to people based on those factors?
Ms. MENDOZA. No, I think it is fair to say that we give a pref-
erence to talent in a country where 51 percent of the population is
female, 20 percent of the population is Latino. And I will have to
double check my statistic, but I think it was 32 percent is Black.
And if you are equitably distributing capital on a fair shake basis,
that is what it should look like.
I would like to ask the same question of the firms that have de-
ployed to 99 percent white men at the same time. I think if you
are deploying to any population and you are giving talent a chance,
your deployment should look like the population that you are de-
ploying to. We also have white male founders with great teams.
Mr. WIED. All right. Well, thank you. And I yield back.
Chairwoman VAN DUYNE. Thank you.
I now recognize Mr. McGarvey from Kentucky for 5 minutes.
Mr. MCGARVEY. Thank you, Madam Chairwoman. It is no
question that private equity has sort of changed the landscape for
small businesses. Over the last decade, the United States capital
markets as a whole have enjoyed enormous growth, but a dis-
proportionate share of that is going into the private markets rather
than the traditional public equity markets.
So I will just say I am not reflexively anti-private equity. I un-
derstand there is, there is a legitimate role for private equity firms
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and often providing capital to small businesses. But I do share the
concerns of my colleagues about some of the private industry—pri-
vate equity’s consolidation in healthcare, and some of the industry’s
tactics in doing so.
Ms. Mendoza, private equity firms have drawn criticism over the
years for exactly some of those tactics. You know what they are:
layoffs, selling off assets for quick cash, loading up a business with
tons of debt, selling it off, and, you know, and the list goes on and
on. And while these strategies can maximize returns for a private
equity fund’s investors, they often leave businesses, communities,
workers worse off. So considering these well-publicized issues that
we have all seen, what are the potential drawbacks for small busi-
nesses who choose to partner with private equity or private credit
rather than going to traditional lending markets? And then what
are the advantages?
Ms. MENDOZA. A lot of the times business are going there be-
cause traditional lending markets won’t serve them. So it is just
like your personal finance. When you have money and you don’t
need money, that is when the bank is willing to give it to you. And
so as you move down that spectrum, the terms are going to get
more predatory. It is business.
I think that part of the issue is also that the capital often is not
coming from the communities. And so part of the reason that we
are so passionate about representation across our entire capital
stack is that when the capital comes from the community, you have
some checks and balances in place. You know, in New England we
fish a lot and we always say that you need local knowledge in order
to be able to get anything. And I think a lot of those problems are
endemic of a disconnect in priorities between the community and
the private equity firm that is usually somewhere else coming in
with very different goals. We need to pivot that to being building
rather than extractive.
Mr. MCGARVEY. Does seeking private capital through the SBIC
negate some of those problems that could happen for a small busi-
ness?
Ms. MENDOZA. Yes, I think it does because it puts a standard
term out there for companies that need it. And so it creates essen-
tially a competition in the marketplace where you have a more fair
product for the business owner.
Mr. MCGARVEY. Thank you for that. And Mr. Bastable, I want
to talk to you. I am from Louisville, Kentucky, so we are both from
the middle of the country. In fact, I went to the University of Mis-
souri and married a Jeff City girl. So have a connection with Mis-
souri certainly. You know where we are from and we know that
most of the private equity investment and job growth takes place
on the coasts and in big cities around the country. Last Congress,
the House passed the Investing in All of America Act to give SBICs
bonus leverage to invest in rural and underserved small busi-
nesses.
How else can Congress increase investment in under capitalized
businesses in places like my hometown of Louisville or in St. Louis,
Missouri, where you have an office? Is there a greater role for SBIC
is in that?
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Mr. BASTABLE. It is a great question. And the SBIC program
is a phenomenal program and it is amazing how much capital flows
into these rural communities because of that program. And I think
the bill, the Investing in All America Act, and increasing the lever-
age limit will continue to drive more capital into these rural com-
munities in the middle of America where, frankly, it is a lot of
manufacturing industrial jobs where they make products.
Mr. MCGARVEY. And when you talk about increasing that limit,
is that something you would peg to a number or would you peg it
so it continues to move?
Mr. BASTABLE. I think, I am a simple person, I think picking
a number and then maybe moving it in the future would be the
easiest path forward.
Mr. MCGARVEY. Thank you very much. Appreciate that.
And Madam Chairwoman, I yield back.
Chairwoman VAN DUYNE. Thank you.
I now recognize Chairman Williams from Texas for 5 minutes.
Mr. WILLIAMS. Thank you, Madam Chair. And Mr. Bastable,
again, thanks for being here.
The Trump administration has made it clear that revitalizing
American manufacturing is key to strengthening our economy and
creating jobs. SBA Administrator Loeffler has mirrored those ef-
forts with her Made in America Initiative, which rolls back burdens
from regulations and supports pro growth policies. Therefore, many
private equity firms are channeling critical investments into small
manufacturers across the country.
So how is your firm helping small- and mid-sized manufacturers
modernize their operations and expand manufacturing production
to remain competitive in today’s economy?
Mr. BASTABLE. That is a great question. And I mentioned in
my opening statement one particular investment we have in Gra-
ham, Texas, which you may be familiar with. And they refurbish
shipping containers and turn them into ground level offices. And
one of the things we did was we invested in, you know, tuition re-
imbursement for all those employees. We invested in digital mar-
keting, we invested in new manufacturing techniques to help them
be competitive in the market. And as you know, Graham is not a
huge city, and so it is really important that you create the edu-
cation that is required for these, you know companies to retain
really great talent, and to bring them into the community.
Mr. WILLIAMS. Well, that is great. And so what more can be
done, do you think, to make it easier for private equity investments
to identify and invest in small manufacturing?
Mr. BASTABLE. Yeah, I think the bill that has been proposed,
the Investing in All of America, Act and increasing the leverage for
the SBIC program is one great way to continue to bring capital to
manufacturing businesses.
Mr. WILLIAMS. Okay, great, thanks. Graham’s home of the
Steers. Now, remember that.
Ms. Fields, small businesses often face significant challenges that
can limit their growth potential. And your company’s success shows
how private equity investment can make a real difference in over-
coming these obstacles and this also provides significant returns to
both the investors and the entrepreneurs. So Ms. Fields, can you
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share how beneficial it has been to identify potential investment
opportunities outside the traditional investment hubs, such as Sil-
icon Valley?
Ms. FIELDS. Yes, it is a great question. And I think that, you
know, we are about as far from Silicon Valley as it gets. We are
in the middle of Oklahoma and we are producing real product that
everyday Americans need in their homes. As a small business
owner, we have to grow. If we don’t grow, we are not going to sur-
vive. To have private investment that allows us to make the invest-
ment in things that we need to make at the pace that we need to
make them to stay relevant in our market has been critical to us.
Without that, we would not have been able to do the things that
we have done. We would be having to pick between can I hire a
single person or can I invest in a piece of equipment? But I may
not be able to do both. What this allows us to do is to make the
investments that we need to make to stay relevant to our market
and to do them in a way that allows us to accelerate.
Mr. WILLIAMS. Also helps with a great idea we had in America
called risk and reward. Right? You take advantage of that.
Madam Chair, I yield my time back. Thank you.
Chairwoman VAN DUYNE. Thank you very much.
I now recognize Dr. Conaway from New Jersey for 5 minutes.
Mr. CONAWAY. Thank you, Madam Chair. Related to the issues
that small businesses face are not monolithic, but rather they are
unique to each business, which is why there is an inherent need
to ensure that there is more diversity among regional managers.
Increased diversity ultimately helps broaden the scope for small
businesses that can be impacted by private and public investment.
Ms. Mendoza, before asking my question, I can’t help but recog-
nize and put a point on your own personal experience of being
moved to the basement, as you say, because of a pregnancy and,
well, you said it wasn’t illegal, it certainly was wrong. And it is the
kind of thing, unfortunately, that women and people of color face.
And I think, sadly, even more unfortunately, there are a lot of peo-
ple who seem very satisfied with that state of affairs.
Ms. Mendoza, statistics show that hiring more women and multi-
cultural investment managers at a fund is one of the most success-
ful strategies for increasing investments for underserved entre-
preneurs and small business owners. How can we help promote
more diversity at investment funds and help our diverse small
business owners?
Ms. MENDOZA. So I think it is important to divide the conversa-
tion to, I want to be clear, we don’t have a race-based investment
thesis. We are an American-made company investing in America
with a portfolio that looks like America.
Mr. CONAWAY. Great.
Ms. MENDOZA. And when you do that, you end up with diverse
perspectives at the table, just as it is important to have the diverse
perspectives that are in this room. I will use the Silicon Valley ex-
ample of two guys from similar backgrounds, go to school together,
get funded, and think they are going to crush it. And then the mar-
ket lets them know that that is not the plan for them. And so usu-
ally what we see is that in a founding team, if the founders are
able to bring in diverse perspectives sooner, the business has a
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faster path to success because they are able to get out of their own
heads in a way that is very quantifiable and meet the product and
the market where they meet.
Mr. CONAWAY. Moving on to another issue in this area which
I find very concerning. Community development and financial insti-
tutions in tandem with new market tax credits have made a mas-
sive impact in my home state of New Jersey. There have been a
billion and a half new market tax credit investments in New Jersey
and approaching $700 million worth of community development fi-
nancing loans. These are critical programs that serve as a lifeline
for small businesses in historically underserved communities by
providing credit, capital, and other critical financing services avail-
able.
Earlier this year, President Trump issued an executive order
that aims to curtail the nonstatutory work of the CDFI fund. And
last week the administration issued their initial fiscal year 2026
budget proposal that guts the program and turns it into a discre-
tionary grant program. Very interesting to see who will be able to
walk in the door and get those grants. The CDFI venture funds
provides equity and debt to undercapitalized businesses around the
country and made more than 55 million in investments in small
businesses in 2023. Additionally, CDFI venture funds provide eq-
uity and debt and equity features to undercapitalized businesses
around the country and made more than $55 million in invest-
ments in small businesses, as I mentioned.
If you were going to broaden equity investments in our under-
capitalized small businesses, isn’t this administration’s gutting of
these important programs exactly what we ought not be doing?
Ms. MENDOZA. I do agree with that.
Mr. CONAWAY. I yield back.
Chairwoman VAN DUYNE. Thank you very much.
I now——
Mr. CONAWAY. No. Oh, I don’t. Sorry. I want her to answer the
question. I will yield in a second.
Chairwoman VAN DUYNE. Okay. I was like, you are staring at
me. I am like, okay.
Mr. CONAWAY. I was going to stop talking and let her finish.
Chairwoman VAN DUYNE. Ms. Mendoza.
Ms. MENDOZA. Speaking of the system, I will always mess up.
Chairwoman VAN DUYNE. Do you want to go ahead and an-
swer?
Ms. MENDOZA. Yeah. I was just going to say I think Detroit is
a great example of what a CDFI can do first for a city. You know,
since the ’80s and ’90s they have been bringing Detroit back with
very similar investments. And I think, honestly, the only failing I
can think of with CDFIs is that we didn’t put enough in, the need
is greater than the capital. And I can’t name a local small business
owner that knows their local CDFI off the top of their head is that
we need a PR campaign for them.
Mr. CONAWAY. Great. And thank you. And now I yield back.
Thank you, madam.
Chairwoman VAN DUYNE. Excellent. Thank you.
I now recognize Mr. Latimer from New York for 5 minutes.
Mr. LATIMER. Thank you very much, Madam Chairman.
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There seems to be some misconception that by presence on the
East Coast, perhaps it is true on the West Coast as well, that auto-
matically funding will follow. And my experience in my area is that
the same challenges exist market by market, depending on the
business and depending on the location of it within that district or
that market. So I would like to ask each of you one question, and
I will start with Ms. Mendoza, but I would like each of you to ad-
dress it. What do you see as the things that the SBA can do
proactively to better promote the programs that would help these
communities to make that connection as a government agency?
What tools would help us better get that message out and reach
the people that can best be benefited by these programs?
Ms. Mendoza and then the other folks on the panel, I would ap-
preciate that.
Ms. MENDOZA. I think we are a great example of this. We are
a successful venture capital firm built from scratch, and we haven’t
gotten a single grant from anyone because I don’t have time to read
the website and figure it out and apply for it when I can be poten-
tially closing an investor. And so the one tool that you can do is
meet the market where it is and lower barriers at every possible
entry so that these small business owners who are already taxed
for time and resources, it is very clear to them what is available
to them and how they apply for it.
Ms. FIELDS. Yes. Thank you for that question. I think for us as
a small business owner, we often don’t have time or are unaware
of what opportunities are even out there for us. We are simply too
busy just trying to run the day-to-day of the business. I think for
me being locally in Oklahoma, I sit on the board of the Oklahoma
Manufacturing Alliance, which is an MEP, and they have been in-
strumental in helping us understand what is even out there to sup-
port us for a small business. For them to come into our business
and understand what happens for us on the local level, what we
need on a local level, and what is available to us has been instru-
mental in us being able to take advantage of these types of things.
Mr. BASTABLE. I think the first is to educate and make sure
people understand what programs are available. But I think the
biggest impact would be simplification. I think we have taken
something that should be relatively simple and we have made it
very complex. We have made it arduous, time-consuming, and I
think a lot of people just drop out of the process because of the
complexity associated with it.
Mr. LATIMER. Thank you very much for your answers.
Madam Chair, I return the time.
Chairwoman VAN DUYNE. Thank you.
I now recognize Ms. Goodlander from New Hampshire for 5 min-
utes.
Ms. GOODLANDER. Thank you, Madam Chair. And thank you
to our witnesses for being here today and for your testimony.
I appreciate the positive examples that have been lifted up today.
I came to Congress having served in the antitrust division at the
Department of Justice. So I gave a great deal of time to really try
and understand how private equity and venture capital firms are
operating in really important industries across our economy, in-
creasingly consolidated industries across our economy. I spent a lot
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of time thinking about our housing markets and our healthcare in-
dustry. And, you know, as I have been on the job now for about
150 days and as I have traveled around my state in New Hamp-
shire, the concerns that I was looking at at the Justice Depart-
ment, I am seeing them play out in practice on the ground. The
role that private equity firms have played in the nursing home in-
dustry in rolling up mental healthcare providers across the coun-
try, the concerns are real.
And I wanted to, at the outset, enter two articles into the record
today. One is an op-ed written by one of my constituents from
Nashua, New Hampshire, Melbourne Moran. He writes about the
critical role of small businesses in mental healthcare. And his
small business, Wanderlust Therapeutic Services, plays a really
important role in my hometown Nashua in ensuring mental
healthcare access. He says that local health practices like his aren’t
branches of large corporations. ‘‘They are local mom-and-pop coun-
seling shops, owned and operated by licensed clinicians who live
and work right alongside their clients. These professionals aren’t
answering to shareholders or national franchise boards. They are
not corporate entities. They are answering to the needs of their
neighbors.’’ And I think he is absolutely right.
I also wanted to enter into the record a piece from one of my
former colleagues at the Justice Department, Brendan Ballou. He
points to—it is a New York Times piece entitled ‘‘Private Equity is
Gutting America and Getting Away with It.’’ He points out at the
outset that according to the nonpartisan National Bureau of Eco-
nomic Research, private equity ownership just in the nursing home
industry alone is responsible for 20,000 premature deaths over a
12-year period.
So I wanted to enter these articles into the record and ask, be-
ginning with you, Ms. Mendoza, if you could comment on what you
have observed in the role that private equity and venture capital
firms have played in industries, including in our healthcare indus-
try and our housing industry, and do you see any problems?
Ms. MENDOZA. In my opening remarks, I quoted Eric Ries from
Lean Startup, and his entire concept is that you need a feedback
loop. You need to release a product into market, talk to the market,
and come back. I see the same problem in private equity that I see
with us rolling out programs recently is that that feedback loop is
broken and we are not listening to the customers that are con-
suming it and coming back to them. So I think anytime that you
blitzscale an industry without a feedback loop, and we have a his-
tory of that in the United States, you end up with these issues.
But I do want to be careful that not all private equity firms are
created equal. I also use the example of, you know, we have 55 mil-
lion under management, A16Z is in the billions. And so I think it
is a different—when you are legislating this entire industry, it is
a lot like trying to legislate agriculture. You know, there are small
organic farmers. There are also huge food factories, and you can’t
put them all in the same bucket.
Ms. GOODLANDER. I understand that. A follow-up question is
as a general matter, as a general principle, do you agree that firms
should be sued and be held accountable, should be able to be sued
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and held accountable, for any wrongs that are committed by com-
panies in their ownership and control?
Ms. MENDOZA. So if the private equity firm has a controlling
interest in that company, they would be voting board members and
they should be held accountable in that role for that.
Ms. GOODLANDER. Would our other witnesses like to comment
on that question or?
Mr. BASTABLE. No, but are you referring to the first question
you asked about consolidation?
Ms. GOODLANDER. No, I am asking do you think as a general
principle that firms should be able to be held accountable, should
be suable for wrongs committed by companies that they effectively
control?
Mr. BASTABLE. I mean, I think it is a nuanced question de-
pending on what is actually happening. And as you mentioned, you
know, there are different situations in different sized businesses
and different parts of the capital stack where private equity is in-
volved, where they may be a lender and they may have board ob-
servation rights, or they might be a minority investor. And so it is
a broad, you know, topic.
Ms. GOODLANDER. Sure. I think, though, that this cornerstone
principle of accountability is part of what we need in this country
to restore faith in private equity firms across our country when so
many communities have felt the pain of an unaccountable entity
gobbling up some of the most important institutions in the life of
our community.
So I thank you and I yield back.
Chairwoman VAN DUYNE. Thank you very much.
I now recognize Mr. Bresnahan from Pennsylvania for 5 minutes.
Mr. BRESNAHAN. Thank you, Madam Chair, for convening this
important hearing. And thank you to our witnesses for being here
today.
I have always been a strong advocate for expanding opportunities
for our entrepreneurs and small businesses to start, grow, and
thrive. For some, the right path may be working with the local
community bank, securing an SBA loan, or receiving a government
grant. For others, private equity can serve as a powerful engine
fueling innovation, expansion, and ultimately a chance to achieve
the American Dream. When done right, these partnerships can
help small businesses grow in ways that benefit all of us, creating
good, high-paying, and meaningful jobs for hardworking Ameri-
cans.
Ms. Fields, your work in the manufacturing sector, especially rel-
evant to Pennsylvania’s Eighth Congressional District, where man-
ufacturing plays a vital role to our local economy, I want to revisit
a particularly compelling part of your testimony that deserves to be
underscored in this conversation. You shared that thanks to your
partnership with private equity, your company is now in a position
to onshore more of its manufacturing operations and plans to grow
your workforce by over 30 percent in the next 18 months. That
kind of investment in American jobs and communities is exactly
the type of success stories we should be recognizing and supporting
here in Congress.
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With that, Ms. Fields, I will turn to you for my first question.
You mentioned onshoring your manufacturing operations. Could
you expand on why they are such a priority for your business and
what specific challenges you are encountering in doing so?
Ms. FIELDS. Yes. We always want to be an American manufac-
turer first and the only reason that we do not manufacture some-
thing in America is simply because we cannot compete with what
it costs us to produce it here versus what it would cost us to
produce it overseas. And so, we do presently manufacture some
products overseas.
By having private equity come alongside us and the things I had
previously mentioned about allowing us to figure out how to get
cost out of our operation, become far more efficient, and to under-
stand how to better run a more efficient facility, it allows us to look
at products that were previously unattainable to us to manufacture
domestically. Now we can bring those back. Obviously, the poten-
tial tariffs out there also allow us to look at that even harder
today. And so we can now confidently make those needed invest-
ments to expand our product line and bring those products back,
knowing that we can produce them here and compete with other
larger companies.
Mr. BRESNAHAN. What challenges are you experiencing on the
workforce development side?
Ms. FIELDS. Our biggest challenge is access to workforce. So a
question for us is being able to bring people in to do manufac-
turing. It is sometimes hard to find people, so we partner with local
trade schools to get those people.
Additionally it is hard getting people to stay. Once they join us,
we get them trained, and getting them to stay so we have to be
competitive in terms of pay, benefits and a pleasant work environ-
ment.
Mr. BRESNAHAN. Well, I appreciate that. Now, regarding the
partnership with private equity, did you look for similarities, simi-
lar overlapping business practices, or what was the—if you can
point to the single most beneficial part of the relationship and part-
nership, what would that have been?
Ms. FIELDS. I think for us, obviously, capital is part of it, but
for us it is having expertise brought into our business. Our private
equity firm, as I mentioned, is actually Mr. Bastable’s firm that we
are partnered with and they focus on manufacturing in the lower
middle market, which is exactly in the pocket for us. They have
people on their team that have expertise that we simply did not
have access to or could not afford to have access to. The partner-
ship, the relationship, the expertise and the support that they
bring is critical to us.
Mr. BRESNAHAN. I appreciate that.
Mr. Bastable, I will pivot to you. Right now we are looking at rel-
atively high interest rates, around 7 percent, which makes it dif-
ficult for businesses to justify new investments. In that context,
can you elaborate on how private capital can serve as a critical tool
to help businesses invest, scale, and create jobs in the United
States?
Mr. BASTABLE. Yeah, it is a great question. And so as interest
rates increase, it becomes more costly for them to take on debt, to
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invest in equipment, and so on and so forth. And, you know, when
you have a private equity partner who has access to capital or eq-
uity, they can invest in those opportunities and so they don’t have
to make interest payments every time they make an investment
into their business.
Mr. BRESNAHAN. Do you traditionally charge like a manage-
ment expense back to the company that you are partnered with?
Mr. BASTABLE. Minimal.
Mr. BRESNAHAN. Okay. With that, I yield back. Thanks.
Chairwoman VAN DUYNE. Thank you very much.
Seeing no other questions, I want to thank our witnesses for
their testimony today and for appearing before us.
Without objection, Members have 5 legislative days to submit ad-
ditional materials and written requests for the witnesses and to the
Chair, which will be forwarded to the witnesses. And I ask the wit-
nesses to please respond promptly.
If there is no further business, without objection, the Committee
is adjourned.
[Whereupon, at 11:04 a.m., the Subcommittee was adjourned.]
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APPENDIX
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Æ
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