Review of the Small Business Investment Company Program (Senate Small Business Committee hearing, June 9, 2021)
Summary
S. HRG. 117–211, the printed record of a hearing titled Review of the Small Business Investment Company Program before the Senate Committee on Small Business and Entrepreneurship, held June 9, 2021 in the 117th Congress and printed in 2022. The committee met at 2:30 p.m. in Room 215 of the Dirksen Senate Office Building with Chairman Ben Cardin presiding. The two witnesses are Stacey R. Wittelsberger, Principal of Patriot Capital, and Ivelisse Rodriguez Simon, Managing Partner of Avante Capital Partners. The contents list their testimony and prepared statements, and responses to questions submitted by Senators Hirono, Rubio, Inhofe and Young.
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“Review of the Small Business Investment Company Program (Senate Small Business Committee hearing, June 9, 2021).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/review-of-the-small-business-investment-company-program-senate-small-b-d1adeed641/
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S. HRG. 117–211
REVIEW OF
THE SMALL BUSINESS
INVESTMENT COMPANY PROGRAM
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
JUNE 9, 2021
Printed for the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
47–000 PDF WASHINGTON : 2022
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
SEAN MOORE, Democratic Staff Director
WILLIAM HENDERSON, Republican Staff Director
(II)
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C O N T E N T S
OPENING STATEMENTS
Page
Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland .............. 1
WITNESSES
Wittelsberger, Mrs. Stacey R., Principal, Patriot Capital, Baltimore, MD ......... 4
Rodriguez Simon, Mrs. Ivelisse, Managing Partner, Avante Capital Partners,
Los Angeles, CA ................................................................................................... 13
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Cardin, Hon. Benjamin L.
Opening statement ........................................................................................... 1
Rodriguez Simon, Mrs. Ivelisse
Testimony .......................................................................................................... 13
Prepared statement .......................................................................................... 15
Responses to questions submitted by Senators Hirono and Rubio ............... 44
Wittelsberger, Mrs. Stacey R.
Testimony .......................................................................................................... 4
Prepared statement .......................................................................................... 6
Responses to questions submitted by Senators Hirono, Rubio, Inhofe,
and Young ...................................................................................................... 36
(III)
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REVIEW OF
THE SMALL BUSINESS
INVESTMENT COMPANY PROGRAM
WEDNESDAY, JUNE 9, 2021
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m. in Room
215, Dirksen Senate Office Building, Hon. Ben Cardin, Chairman
of the Committee, presiding.
Present: Senators Cardin, Cantwell, Duckworth, Rosen,
Hickenlooper, Scott, Ernst, Inhofe, Young, Hawley, and Marshall.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
CHAIRMAN, A U.S. SENATOR FROM MARYLAND
Chairman CARDIN. The Small Business and Entrepreneurship
Committee will come to order. I have checked with Senator Paul
and he will be here shortly, and he has asked that we start the
hearing, so we will start the hearing, with Senator Inhofe here in
person, Senator Ernst here in person. I think I saw Senator Young
on the Webex. We are still doing these hybrid hearings between the
Webex and in person, and I take it we have one of our witnesses
that is going to be also by Webex.
So today’s hearing involves the small business investment com-
panies, the SBIC. I want to thank Senator Paul for his help in al-
lowing us to put together this hearing. The SBICs were created in
1958, and to date have been responsible for investing over $100 bil-
lion into small businesses, to tens of thousands of small businesses
that have benefited through the SBIC.
The companies that have benefited from small businesses, many
have gone on to become even global brands, such as Intel, Apple,
FedEx, so good things happen when we can find a way to finance
creative ideas.
I have my own experience with the SBICs. Before I was in Con-
gress, I represented small businesses and had the opportunity to
help manage an SBIC that provided help to independent groceries
that were struggling to get started. I am proud to say that some
of these small, independent grocers are now regional chains that
have grown as a result of being able to get financing to start, and
the SBIC helped make that a reality.
The 2020 numbers are extremely impressive—$4.8 billion was in-
vested to over 1,000 companies, without any cost to the taxpayers
(1)
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whatsoever. I know that is going to make a lot of my colleagues on
this Committee very happy to know that this is one in which there
has been no cost to the taxpayers. It actually is a benefit to our
small businesses and it allows our economy to grow.
It is our Committee’s responsibility to find ways to make this
program even more effective, particularly coming out of COVID–19,
considering the impact it has had on small businesses. So we have
challenges. We have challenges in all of our programs. We have the
historic problems of women-owned businesses, black, Hispanic,
rural, and other underserved communities that existed before
COVID–19, that was made more difficult as a result of COVID–19
in attracting capital.
This is particularly acute in venture capital, startup companies.
The numbers there are shocking. Ninety-three percent of venture
capital is controlled by white male ownership. A majority of our
venture capitalists are located in three communities: Boston, New
York City, and Silicon Valley. When we look at venture capital and
the availability of venture capital today, less than 1 percent goes
to black-owned businesses, 2 percent to Hispanic-owned businesses,
and 3 percent to women-owned businesses. We can and must do
better, and the SBIC can play a very important role in making that
a reality.
Consider, for example, CSS Antenna, a women-owned business
founded in Edgewood, Maryland. Founded in 1997, CSS was a de-
signer and manufacturer of telecommunications products such as
antennas and filters. Between 1999 and 2005, the company in-
creased revenue by more than 2,000 percent, from $2 million to $44
million.
By 2007, due to the slowdown in cellular technology development
and the growing economic crisis, CSS experienced a significant de-
cline in sales, and was in desperate need of capital. The company’s
primary lender at the time was not willing to provide capital dur-
ing the downturn, but through an investment from Patriot Capital,
which is being represented here today by our witness, Stacey
Wittelsberger, CSS was able to bounce back.
After being forced to lay off employees due to lack of funding in
2008, the company grew from $8 million in revenues that year to
$19 million in 2009, and were able to rehire their workforce. By
2013, annual sales at the company were once again more than $40
million. A clear example of where the SBIC really came in to serve
our small business community. When the company was eventually
sold to competitors based in Liverpool, New York, in 2013, all of
their employees, which at the time numbered more than 100, kept
their jobs. That success story would not have been possible without
SBIC funding.
Our focus today must be on how we can take SBIC from a good
program to a great program, a more inclusive program, that
reaches underserved communities frozen out of traditional venture
capital markets.
I want to thank our colleagues, Senator John Hickenlooper and
Senator Jim Risch for their leadership on this issue. This is bipar-
tisan support in our Committee. They have introduced the
MicroCap Small Business Investing Act, legislation to authorize
the SBA to create a MicroCap SBIC license that would encourage
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more underrepresented investment managers to participate in the
program. The bill is important because we know that racially and
gender-diverse SBIC funds invest more frequently in minority- and
women-owned businesses.
We must also create an on-ramp for fund managers from under-
represented communities to get into existing SBIC programs. One
of our witnesses, Ivelisse Rodriguez Simon, of Avante Capital Part-
ners, has spearheaded an excellent internship program at her firm
that could serve as a model as we continue our work to diversify
the SBIC program, and I look forward to her testimony and ex-
plaining that program.
We also need to explore ways to restore one of the pillars of the
program, equity investing. After the collapse of participating secu-
rities 15 years ago there has been a gap in the program’s ability
to deliver patient capital to startups and small manufacturers.
And we must also explore policies that will create strong innova-
tion ecosystems in underserved communities. In January, Senator
Hirono and I introduced the UPLIFT Act, which would nurture in-
novation ecosystems in minority, low-income, rural, and other un-
derserved communities by providing HBCUs, minority-serving in-
stitutions, and community colleges with the resources to establish
and expand incubators and accelerators for underserved entre-
preneurs.
Because while SBIC is able to support innovation to small busi-
nesses ready to take on investment, it is also vital that we fund
growth accelerators and incubators that could help innovators turn
their ideas into a startup.
So I am looking forward to a robust discussion with our wit-
nesses today about what the Federal Government can do to better
support these programs. The months and years ahead will provide
us an opportunity to reshape our Nation’s economy. We should also
improve the SBIC, invest in it, and make it more equitable so we
can build back better. We have a unique opportunity, and this
hearing will help us in what we should do in order to improve that
program, that very important program.
With that, I will interrupt our witnesses when Senator Paul ar-
rives so he can have a chance to make opening statements, but at
this point we will proceed with our witnesses. Our first witness—
I have already alluded to our two witnesses today, but our first wit-
nesses is Stacey Wittelsberger, who is the Principal Partner at Pa-
triot Capital. Patriot Capital is an SBIC located in Baltimore, and
she has been there since June 2010. She is responsible for origi-
nating, underwriting, execution, portfolio management, and inves-
tor relations, and she lives in the Fells Point neighborhood of Balti-
more, Maryland, one of my favorite places to go in the city of Balti-
more.
Our second witness is Ivelisse Rodriguez Simon, Managing Part-
ner of Avante Capital Partners. She is a managing partner, which
is based in Los Angeles. She currently manages the fund’s portfolio
and new deal activities. Ms. Rodriguez Simon joined Avante in
2009, as a founding member of the firm.
So we have two individuals who are intimately involved in the
management of SBICs, so they can tell us how it works and hope-
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fully ways in which we can innovate to make the program work
even better as we look at ways to improve the program.
We still start with Stacey.
By the way, your full statements will be made part of the record,
and you may proceed as you choose.
STATEMENT OF STACEY R. WITTELSBERGER, PRINCIPAL,
PATRIOT CAPITAL, BALTIMORE, MD
Mrs. WITTELSBERGER. Thank you. Chair Cardin and members of
the Committee, thank you for inviting me to testify today on behalf
of the Small Business Investor Alliance. My name is Stacey
Wittelsberger. I am a principal with Patriot Capital, headquartered
in Baltimore, with offices in Chicago, Dallas, and Atlanta.
Patriot Capital is a multi-strategy middle market investment
manager that is a five-time licensee in the program. Additionally,
we are an active member of the SBIA. Our firm focuses on invest-
ment opportunities in small and medium-sized, privately held com-
panies. We typically invest $3 to $25 million in each of our portfolio
companies. According to internal data from our three most recent
funds, representing a portfolio of about 84 small businesses, either
current or exited, our companies employ approximately 33,100 em-
ployees, which represents a 27 percent increase in jobs from the
time in which we made the initial investments.
One example of a portfolio company investment, previously dis-
cussed by Chair Cardin, with strong job creation right in my home
State of Maryland and also women owned, was a telecom manufac-
turing business called CSS Antenna. At the time of our investment
in 2008, the company employed approximately 40 individuals. Our
capital helped the business survive as the industry was
transitioning from 3G to 4G technology development buildout,
causing a lull in customer demand. CSS further grew to over 150
employees at the time of our exit in 2013.
SBICs are an American success story, an example of successful
Federal public policy that aligns the power of private markets with
the public interest of job creation and expanding economic growth
and opportunity. The SBIC program is largely working well, but
targeted improvements would help. I would like to discuss some po-
tential recommendations for improvement.
First, SBA Administrator Guzman has inherited an agency oper-
ating an unprecedented number of new pandemic trigger programs,
set up in an inconceivably short amount of time. The SBA, how-
ever, continues to be chronically understaffed, with outdated tech-
nologies and a limited budget to secure new technology tools. The
SBIC program, in particular, needs an appointed leader to serve as
the Associate Administrator for the Office of Investment and Inno-
vation.
The OII staffing shortages are also not conducive to capital ac-
cess or healthy oversight of the program. For example, frontline
SBIC regulators typically monitor and regulate only about 10 to 12
funds per regulator, because of the unique nature of each of the
funds. Today, however, the SBA is so short-staffed that the ratio
between OII regulator and regulated SBIC fund is at an impossible
level of about 45 or more funds per operations analyst. We encour-
age Congress to provide the necessary resources, both human and
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technological, to ensure that the SBA is able to run this successful
program and provide necessary oversight.
The SBIA also supports the Investing in Main Street Act, a bill
introduced during the last Congress session by Senators
Duckworth and Young. The bipartisan bill, which passed in the
House by a vote of 403–2, but was not considered in the Senate,
would fix a drafting discrepancy between small business and bank-
ing law, and permit banks to invest up to 15 percent of their sur-
plus capital in SBICs.
Next, the SBIA supports a bipartisan bill, introduced recently by
Senators Hickenlooper and Risch, the MicroCap Small Business In-
vesting Act of 2021. It would authorize the SBIA to create a new
pathway to license newer, smaller funds within the existing param-
eters of the current SBIC program. The goal of the legislation is
to expand the pool of qualifying fund managers in the SBIC pro-
gram by providing broader access for talented, underrepresented,
diverse people, in potentially smaller geographies, where there is
currently limited access to participating in the SBIC program, with
the goal of directing much needed capital to smaller markets. The
SBIA encourages the Senate to pass the Hickenlooper-Risch bill.
Finally, small businesses need more access to equity, which is
the most patient form of capital. Equity investments are typically
less of a cash constraint than debt, allowing for more money to be
reinvested into a business, fueling growth. Equity is also typically
more appropriate for earlier-stage businesses, not yet generating
significant revenue. Equity capital, however, can be the hardest for
small businesses to access, especially many early stage businesses
which tend to be composed of a younger, more diverse demographic
than prior generations.
The SBIA supports empowering SBICs to provide more equity in-
vestments than currently allowed by the SBA. This would also help
create economic opportunity in parts of the country that are under-
capitalized compared to the three regions previously mentioned
that receive an estimated 75 percent of early stage capital invest-
ments today.
In conclusion, the SBIC program is well positioned to provide
much-needed capital to domestic small businesses, and Patriot
Capital is proud to be one of the growing numbers of SBIC’s licens-
ees, helping U.S. small businesses, stimulate the economy, and cre-
ate jobs.
Thank you again for the opportunity to testify on behalf of the
SBIA.
[The prepared statement of Mrs. Wittelsberger follows:]
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Chairman CARDIN. Mrs. Wittelsberger, thank you very much for
your testimony. We will now turn to Mrs. Rodriguez Simon, via
Webex.
STATEMENT OF IVELISSE RODRIGUEZ SIMON, MANAGING
PARTNER, AVANTE CAPITAL PARTNERS, LOS ANGELES, CA
Mrs. Rodriguez Simon. Good afternoon, Chairman Cardin, Rank-
ing Member Paul, and members of the Committee. It is my sincere
honor to be speaking with you all today. My name is Ivelisse Rodri-
guez Simon. I am originally from Puerto Rico, and I grew up in a
low-income neighborhood on the south side of Chicago. I was the
first person in my family to attend college, and I started my career
in the mid-1990s in investment banking on Wall Street. I have
more than 20 years of experience in investment management and
an MBA from Harvard Business School. I am a managing partner
and one of the founders of Avante Capital.
Avante is a 100 percent women-owned firm with close to $900
million of capital under management. Our firm was founded in
2009, and has been a proud member of the SBIC program ever
since. In 2018, we were selected as the SBIC Fund of the Year for
our strong track record of performance and our commitment to job
creation. Over the last decade, we have invested more than $500
million in both debt and equity in over 100 companies, and we have
never had a cash loan loss.
Of our 16 team members, 12 are women, minorities, or both. We
are passionate about supporting women and underrepresented com-
munities in this industry, and we fundamentally believe that diver-
sity is not only a social imperative, it is also good business that
drives better returns and incremental job creation.
There are two questions I would like to discuss with the Com-
mittee today. First, how could we better utilize the SBIC program
to drive additional job creation and innovation across the country?
And second, how do we increase diversity within the program to
spur investments in underserved communities?
The existing SBIC debenture program is, by all accounts, a huge
success. As mentioned by Senator Cardin, SBIC funds have pro-
vided more than $100 billion of funding across 200,000 financings
to small businesses, creating more than 3 million jobs in just the
last 20 years. Last year alone, SBIC funds facilitated more than
$4.8 billion in investments to more than 1,000 companies across
the country, at no cost to American taxpayers.
Despite the success of the SBIC program, it is underutilized.
While the SBA is authorized to provide up to $4 in leverage to
SBICs annually, SBIC funds are only drawing about $2 billion in
SBA leverage each year. We should expand the program and fully
utilize it to get more capital invested in small businesses, espe-
cially now when those businesses will be key to our economic recov-
ery and growth.
One way to do this is by providing more capital and human re-
sources to the Office of Investment and Innovation at the SBA.
They are a highly competent, committed group of professions. How-
ever, they are under-resourced. Providing them additional re-
sources would allow them to process and manage more license, and
as a result, SBICs will deploy more capital to small businesses.
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Another way to inject more capital into small businesses is to es-
tablish an SBIC equity program. An equity program would broaden
access to capital for small business that are prime for growth but
unsuited for the current debenture program.
Broadening the impact of the SBIC program, however, does not
just mean adding resources and new types of financing. It also
means deploying capital in a more fair and equitable way. Each
year, SBICs provide only 5 percent of the total financing to minor-
ity-owned businesses, and about 3 percent to women-owned busi-
nesses. This lack of diversity in investments stems directly from
the lack of diversity among SBIC fund managers. This is no more
than a handful or two of women and minority-owned investment
managers in the 300-plus SBIC licenses outstanding. Yet we know
that SBIC managers, diverse SBIC managers, invest more fre-
quently in minority and women-owned businesses. To invest more
equitably, we need more diverse managers in the existing program.
When I talk about diversity in this industry I often hear that
there is not a robust pipeline of qualified diverse managers. I am
here to tell you that is just not true. There are many experienced
women and people of color with proven track records, who are
amply qualified to manage a successful SBIC fund. We need to
reach out to these diverse managers and recruit them to benefit
from their experience and their diverse networks.
To further facilitate the growth of diverse SBIC managers, we
should also establish an official Mentor–Protégé program. We
should provide incentives for established funds to invest in and
support new, diverse manager funds and guide their development
within the SBIC program.
Lastly, diversity efforts work best when everyone is involved. We
should create a diversity task force or working group charged with
implementing and tracking initiatives that drive meaningful diver-
sity of manager and investments. And we should work closely with
private industry. As Senator Cardin mentioned, my firm launched
the first-ever internship program in the SBIC industry. This sum-
mer, we will welcome 30 interns, all women and people of color,
who will work at 25 SBIC funds across the country. We are very
excited about growing the program.
In closing, I would like to offer my continued support to work
with any of the members of the Committee in our collective efforts
to expand the SBIC program and drive diversity within it.
And thank you for allowing me to participate virtually. I actually
had a baby eight days ago, and so while I may be sleep deprived,
I am very honored to be here today.
[The prepared statement of Mrs. Rodriguez Simon follows:]
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Chairman CARDIN. Well first, congratulations on your child. A
boy, I understand?
Mrs. Rodriguez Simon. A boy. Yes, sir.
Chairman CARDIN. He is doing well?
Mrs. Rodriguez Simon. He is doing very well. He is baby number
four, so it is old hat by now.
Chairman CARDIN. So you are used to this. You are a real pro
at this. Well, congratulations to you, and thank you very much for
your testimony.
I want to first cover a point that both of you have talked about,
and that is equity funding and how we need to deal with this. It
is interesting that we have provided help to large industries during
economic downturns. During the Great Recession we provided sub-
stantial help to major industries. We took back notes that gave us
the ability to take some of the profits, based upon what happens
in the future. So the government has been involved in ways in
which we can provide help to industries.
The SBIC has traditionally not been involved in that particular
field, so you are suggesting perhaps a separate fund that would
deal with equity investment or startup. Is that what I understand
the recommendation? I think, Mrs. Rodriguez Simon, you specifi-
cally mentioned that, and Mrs. Wittelsberger, you said we have to
do something in regards to equity funding. Are there specific rec-
ommendations you have in that regard?
Mrs. Rodriguez Simon. Yes, sir.
Mrs. WITTELSBERGER. Go ahead.
Chairman CARDIN. Go ahead, Mrs. Rodriguez Simon.
Mrs. Rodriguez Simon. Yes. There is a very significant oppor-
tunity for us to continue to support small businesses through eq-
uity investing. Currently, the debenture program invest primarily
debt, which is a very effective way to help companies grow. How-
ever, not all companies are suited for debt. There are businesses
that are either too small, too new in their cycle, do not generate
enough cash-flow, that really could utilize equity.
And so my suggestion would be that we create a program very
similar to the debenture program but that allows for equity, allows
for SBIC funds to invest equity rather than debt. They would go
through a very similar process for licensing, and they would be
managed in a very similar way.
My additional suggestion, though, is that we need to be very in-
tentional about making sure that we recruit diverse managers into
that equity program, so that we do not face the same challenges
we face in the debenture program, which is the large majority of
investment managers are not diverse, and so the majority of the
capital goes to businesses that are not diverse.
And so if we can start the program off in a good way, and make
sure that a number of those managers are also diverse, I think that
we would be able to significantly increase the amount of capital
and the amount of jobs that we can create through that equity pro-
gram.
Chairman CARDIN. I want to come back to the diverse fund man-
agers. In startup capital, the numbers are even much worse than
general capital, when it comes to opportunities from underserved
communities. So having a mechanism to deal with equity capital,
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23
under our supervision, would certainly be a tool that could help
deal with that.
Mrs. Wittelsberger, in regards to equity capital?
Mrs. WITTELSBERGER. Yes. Thank you, Chair Cardin. As I men-
tioned in my testimony, I think the program is largely working,
and I am not sure that we entirely need a new equity program, and
my main issues there are things that I mentioned in the testimony,
of the SBA being short-staffed right now and not having the tech-
nology tools to run the existing program in its volume.
So I think that it is set up appropriately and that we could po-
tentially add a subset or equity tools to the existing program that
would address some of the issues and concerns that you have, with
the primary focus really being that we make sure that the subset
and the tools work for small business participants, and that it
works for the taxpayer as well.
Chairman CARDIN. Let me drill down on the resources at SBA.
We provided substantially more resources to SBA during COVID–
19, not just in the trillion dollars of relief it provided to small busi-
nesses, but in their administrative support. We did give them more
help.
Both of you have mentioned a need for additional personnel and
technology. Personnel, I understand. Talk a little bit about tech-
nology. Where is the SBA lacking in providing the technical sup-
port necessary to process the SBIC applications?
Mrs. WITTELSBERGER. Sure. I am happy to speak on that. So the
SBA is running about a $33 billion program today on very anti-
quated tools, including Microsoft Access and Excel, and we are a
$315 million fund and have better technology and resources than
the SBA, and we only have 30-some companies to manage. You
know, key challenges like getting something out of the SBA’s Ac-
cess and Excel tools can take a week or days for them to reformat
in order to be able to review the data, which just really is not good
for the program overall or the taxpayer. So upgrading the tech-
nology tools that are available to the SBA would be a huge add.
Chairman CARDIN. Thank you. I have some questions in regards
to the diversity managers, but I am going to yield to my other col-
leagues that are here, and I will come back on a second round.
Senator Marshall?
Senator MARSHALL. Thank you, Chairman. It is great to be back
here and talk small business issues. Certainly every trip back
home, access to capital is a question I get and a riddle we have not
been able to solve.
These SBICs, there is only one in Kansas, and it is currently list-
ed as not likely investing. The passage of the Spurring Business
and Communities Act of 2017, the SBA gave first priority to com-
panies in an under-licensed or under-financed State. Kansas was
not included on either list. Are there moneys that are not being
used and Kansas was too far down, or pretty much are you able
to utilize all the capital that you have available to us? Stacey, Mrs.
Wittelsberger, if you want to go first. Wittelsberger—I am going to
get that right. If you want to go first, if you can help me out.
Mrs. WITTELSBERGER. Yes. So I think Chair Cardin mentioned
this in his remarks as well, but we have about $4 billion in acces-
sible capital to the program. We expect to be over $3 billion of that
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24
this year, so there are certainly more funds to be used. And I think
to address your concern, Senator Marshall, that the MicroCap bill
is a potential outlet for that to bring new managers to the program,
potentially, in your State, that maybe through the existing SBIC
program would not be licensed. So, you know, bringing more capital
to your State and the small businesses there.
Senator MARSHALL. So help me understand. Is the reason nobody
in Kansas has applied for it is because they just have not applied,
or they have applied for it, you think, and they are just not high
enough on the list then?
Mrs. WITTELSBERGER. Potentially within the existing require-
ments for the SBIC program it is just too daunting or they do not
think that they will be able to get a license so they do not attempt
to do it.
Senator MARSHALL. Okay. Mrs. Rodriguez Simon, anything to
add? It sounds like we covered it pretty good.
Mrs. Rodriguez Simon. I think she covered it. One thing I would
say is, you know, if we are intentional about recruiting either rural
or from a specific State, and it is the same comment I have about
recruiting diverse candidates, I think that there are many, many
investment professionals out there that could be recruited to this
program. However, we have not been intentional. We have not
made that a priority and a goal. And so I think we can certainly
include making sure that we have investment managers from
states that are not represented.
Senator MARSHALL. Okay. And I will start with Mrs. Rodriguez
Simon and go backward, to give you both a chance at first shot. My
next one is, like I mentioned, this company in Kansas is not likely
investing. Is that a common thing, and why are people, I guess,
dropping out or not active? Is that common for people to become
not likely investing now?
Mrs. Rodriguez Simon. I have not heard that that is common. I
think that there are a number of us that have been in the program
for a very long time, like Avante has been. We have four licenses.
So I do not have a good answer on that, sir.
Senator MARSHALL. Yes. Mrs. Wittelsberger, any further com-
ment?
Mrs. WITTELSBERGER. Yep, I do not have the specifics.
Senator MARSHALL. Okay. What are the barriers to more firms
being licensed as an SBIC and participating in this program? Or
are there any barriers to be licensed as an SBIC and participate?
Mrs. Wittelsberger, I will let you go first.
Mrs. WITTELSBERGER. Sure. Thank you. The licensing process
today is very subjective. There is a lot of uncertainty around the
time related to the licensing process. It can be very slow. It can
cost hundreds of thousands of dollars. So for a first-time fund man-
ager that is pretty daunting and risky to leave your existing job.
For repeat managers like Patriot Capital and Avante, we have
been through it so we have some level of certainty in getting
through the program.
Senator MARSHALL. Okay. I will go to Mrs. Rodriguez Simon for
my last question. I am going to hate to admit this, Chairman, but
I did not know about this program until today. And, I was a Con-
gressman for four years, ran multiple small businesses, party of a
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25
community bank, and this is the first time I have heard of this pro-
gram. What can we do to raise awareness?
Mrs. Rodriguez Simon. Senator, that is such an excellent ques-
tion, because I think that that is one of the reasons why we do not
have diverse or rural participants, because there is really a lack of
education across the investment industry about this program.
It is an amazing program. I mean, it is compelling for the funds.
It does a lot of good for our country. I think, again, we have to be
intentional about it. We have to give the SBIC the resources to be
able to go out and convince other people, or convince more of the
investment managers to join the program.
Senator MARSHALL. Again, we invite you all to participate. You
know, some of my urban areas, the Chambers there, I think my
Hispanic Chamber in Kansas City is one of the best Chambers in
the country, and this would be one more tool that they could put
in their toolbox. So thank you so much.
Chairman CARDIN. Senator Marshall, I agree with you com-
pletely. That is one of our real challenges. We only have 300 man-
agers in the country and it is not diverse at all. And from the point
of view of not just minority and underserved communities but also
geographically. So it is an area that we really need to improve, and
that is going to be one of the goals of this. So thank you for raising
those issues.
Senator Duckworth is available through Webex.
Senator DUCKWORTH. Thank you, Mr. Chairman. Already the
discussion is very interesting.
My first question is for Mrs. Wittelsberger. As part of the Presi-
dent’s fiscal year 2022 budget, the Small Business Administration
recently identified expanding access to capital for small businesses
as Strategic Objective 1.1, and I could not agree more. My top pri-
orities to assist small businesses are to increase access to capital
and to double down on proven in-demand programs that already
work.
The SBIC program meets both priorities. First, we know it is
popular, especially in times of recovery, and after the Great Reces-
sion the SBA witnessed a significant uptick in SBIC applicants,
and the agency expects a similar uptick during this recovery. And
we know that it works, right? Not only is it popular, it works, be-
cause over the past six years it has supported an average of more
than 100,000 jobs per year, and that is why we must increase fund-
ing available to SBIC participants.
Last Congress, I worked with Senators Young and Risch to intro-
duce the Investing in Main Street Act, legislation that would allow
banks, particularly small ones, to provide more money to SBICs.
The bill passed the House, 403–2, but it did not receive a vote in
the Senate.
Mrs. Wittelsberger, I know that was a long preamble. You men-
tioned this bill in your testimony. Can you describe how this simple
initiative could spur even greater investments into SBIC funds,
and how vital this capital would be as we emerge from the pan-
demic?
Mrs. WITTELSBERGER. Thank you, Senator Duckworth, and yes,
we are totally supportive of the Investing in Main Street Act. As
you mentioned, it seems pretty simple to us. There is a mismatch
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today between the banking laws and the small business laws.
Banks are allowed to invest more dollars in SBICs than SBICs are
allowed to accept today. You know, a lot of this is mainly impacting
smaller banks.
So cleaning up the mismatch between the 15 and 5 percent we
think is an easy fix, and we are supportive of the act.
Senator DUCKWORTH. Thank you. My second question is for Mrs.
Simon. Mrs. Simon, I know you live in Los Angeles, but I know
that you are a native Illinoian, with Chicago roots, and as you said,
you just gave birth last week. Now I brought my baby to the floor
of the Senate to vote at 10 days, so you have beat me in terms of
time. You are a true inspiration.
I appreciated your testimony about the importance of mentorship
programs, and in Illinois we have seen this importance firsthand.
Commissioner Jamie Rhee at the Chicago Department of Aviation
is spearheading a mentorship program between large and small
businesses for projects at the O’Hare and Midway airports, with
the goal being to create a more diverse set of participating com-
pany owners and to give the smallest of small businesses more
prime contracting opportunities.
I want our recovery to include more initiatives like the one at the
Chicago Department of Aviation. Mrs. Simon, can you describe why
having a mentorship program is crucial for promoting opportunity
for new and diverse business owners within the SBIC program?
Mrs. Rodriguez Simon. Absolutely. Thank you so much for your
question, Senator Duckworth. It is an honor to speak to you. I have
admired you for a very long time.
The mentorship program, I think, is instrumental in increasing
the number of diverse investment managers, and also can be used
to increase the number of investments in diverse businesses. This
is an industry of very talented investment managers. The existing
SBIC funds, while not diverse, include a number of really, really
great, talented investors. And if we can connect them with first-
time managers, like funds that may have diverse investment pro-
fessionals that may already have track records but that have never
run a fund before, if we could connect them with established funds
it will have a significantly higher chance of success.
And this program has always been a public-private partnership.
It has been since its very beginning. And so if we continue that
strategy, where we are continuing to partner together with all of
the incumbents within the existing program, I think that we can
make really very significant change.
I think it is an easy program to implement. I think that talking
to my colleagues, a large number of them would be interested, and
again, I think it would make a very significant difference in mak-
ing sure that we get more diverse managers and more capital to
diverse companies.
Senator DUCKWORTH. Thank you. And I know that our Chair-
man, Senator Cardin, is working on this very program with Presi-
dent Biden, and I look forward to joining them in this endeavor.
Thank you so much to both of you for being here today.
I yield back, Mr. Chairman.
Chairman CARDIN. Thank you, Senator Duckworth. Senator
Cantwell.
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Senator CANTWELL. Thank you, Mr. Chairman. Carrying on that
same line, Mrs. Rodriguez Simon, this issue of—in my State we
had SBICs invested $204 million in small businesses between 2016
and 2020. So that could have been more if we looked at our 215,000
women-owned businesses. So as you pointed out, we need to do
more. We are only financing about 5 percent of those minority-
owned businesses.
So I know you just elaborated, and know the Chair, I so appre-
ciate Chairman Cardin exploring this issue as well. So what is that
we need to do? I want you to speak more about what increasing
diversity at the SBIC investment team or management teams,
what we could do to help the teams look more like the women and
minority businesses that they are taking a look at? I know there
is a fund in my State that was started by a group of women for
this very reason, but what else could we do? What else should we
be doing to make sure these investment teams look more like the
people that we are trying to attract, or fund, I should say.
Mrs. Rodriguez Simon. I appreciate the question. It is really a
passion of my team and I to recruit more diverse managers into
this program. So first, I want to start by saying that they exist.
People of color exist as investment managers. We already are out
there, working outside of the SBIC, in a large number.
The NAIC, which is an organization that supports diverse-owned
managers, there are 120 members that that have under manage-
ment $225 billion. They are out there, a lot of them. I am not a
unicorn, right? Even though I am one of the very few in the SBIC
fund, the SBIC program, there are many out there. We need to re-
cruit them.
And it is not as hard, I think, as we expect it to be. In fact, I
started a few months ago with a small panel connecting diverse
managers to the licensing team at the SBIC, which, by the way,
they have been incredibly collaborative and just fantastic partners.
We connected 11 diverse managers to this team, and 3 are already
interested in applying. So it is a matter of being very intentional
about recruiting these managers, about helping them through the
process, creating a Mentor–Protégé program so that they are posi-
tioned to succeed, and making it a clearer path to getting into the
program.
I hope that answers the question.
Senator CANTWELL. It does. We are dealing with the same issue
as it relates to science, engineering, and math, what we need to re-
cruit more women into the sciences. And we have studied it, actu-
ally. NSF studied it. They said we needed to be aggressive, that it
cannot be passive. It has to be aggressive. So what you are saying
is the same thing.
And I am just thinking about this group that did a fund in the
Pacific Northwest. It really did not take them long to get the re-
sources. It is almost like there was a ready-made group of people
that were waiting for them to form so they could give them the
funds. So they came up with funds very quickly. And then by doing
that, you can then attract—and people can say, ‘‘Oh, I can go to
them. I can go to them to talk about my business idea because of
who they represent.’’
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And they did target more mentoring. I think that is the other
thing, too. Once you create a more representative group, they focus
in on those things that you think are important, and in this case
these women knew that mentoring, in a certain particular way,
was going to be more important, and that they would have to spend
more time with people looking at that particular fund.
So I just feel like part of our challenge, right, is to have a distrib-
uted network of opportunity throughout the United States, and we
should really think about what we can do, Mr. Chairman, in this
area. What can we do, almost like incenting people to set up these
funds that look more diverse.
Mrs. Rodriguez Simon. If I can just add, I think the words ‘‘being
aggressive’’ is exactly right. It is really making it a top priority,
putting resources behind it, having a diversity task force that real-
ly keeps all stakeholders accountable, and that reports back to this
Committee on progress. It will happen.
I mean, at our firm everybody told us we would never be able
to hire as many women and people of color as we thought we could.
Well, 12 of our 16 people are women or people of color, because we
have been intentional about it. People say there are none of us.
There are tons of us. We are out there, and we are excited and
ready to help.
Senator CANTWELL. Well, I think, to me, Mr. Chairman, 75 per-
cent of job growth comes from small business, and 50 percent of
our population are women. And so if you are not encouraging the
job growth to happen within 50 percent of the sector of your popu-
lation, you are limiting your job growth. So, to me, we should figure
out a way to, as you said, accelerate or be aggressive on this and
figure out how to get that distribution across the United States. Or,
I do not know, even it was just to learn from the ones that are al-
ready out there.
But I almost feel like there are a lot of women who are in these
business positions that probably—I am not saying they do not
think they are ready. I think if you said, ‘‘Please take up the man-
tle, and here is a little bit of resource so that you can start doing
that,’’ I think we would see a response.
Mrs. WITTELSBERGER. Senator Cantwell, if I could add, we have
talked about this today, but the MicroCap program that is part of
the discussion I think would address some of these concerns. It is
really growing the on-ramp of potential fund managers, which
would be most likely first-time fund managers. So people are not
as scared to risk leaving their current job to enter the program. We
would have a clear path, and likely a clear path to a smaller first-
time fund, which would allow these funds to invest in smaller com-
panies, smaller dollar amounts, and, you know, covering more di-
verse companies, and them themselves being more diverse.
Senator CANTWELL. Thank you. Thank you, Mr. Chairman.
Chairman CARDIN. Just to underscore Senator Cantwell’s point.
According to information I have, only 5 percent of the funds go to
companies owned by women, veterans, or minorities. I mean, we
are talking about a very small amount of SBIC funds actually get-
ting into the minority community or women-owned businesses. And
then you look at the geographical division, we have some states
where there is zero activity on SBIC. So we have a geographical
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problem and we have certainly a problem of reaching the under-
served community. And as I said, this is a good program that can
be made much better.
Senator Rosen via Webex.
Senator ROSEN. Well, thank you, Chairman Cardin and Ranking
Member Paul. I appreciate you holding the hearing on the SBIC
program, and I want to thank everyone for being here today. I
know we are on the topic of women and working women, and so,
Mrs. Simon, I hear you just had a baby, so congratulations to you
for being one of those working moms that we are talking about,
and congratulations on your new addition.
Mrs. Rodriguez Simon. Thank you.
Senator ROSEN. And, you know, I just want to talk a little bit
about what others have been talking about, that lack of SBICs. We
have them in Nevada, and Nevada is home to more than 280,000
small businesses, which make up over 99 percent of all businesses
in my State. Unfortunately, there are no SBA-licensed small busi-
ness investment companies located in Nevada, meaning that Ne-
vada small businesses seeking private capital need either to pursue
funding from SBICs located in neighboring states, like California,
or look elsewhere around the country for access to capital.
So given that most SBICs, they focus on investing in very specific
geographic areas, small businesses in Nevada, and of course in
other states without SBICs, they really may be missing out on
these types of impactful, private capital opportunities that really
uplift their business, especially those that simply just need addi-
tional streams of capital to grow.
So, Mrs. Wittelsberger, as a member of the Small Business In-
vestor Alliance, what barriers in the SBIC program do you see for
states like Nevada that currently lack SBICs, and then I would like
to go over to Mrs. Simon, and say coming from a western State,
obviously bordering Nevada, I would like your take on that as well.
Mrs. WITTELSBERGER. Thank you, Senator Rosen. I think the key
barriers today are the uncertainty around the licensing process,
and, you know, previously discussed, the MicroCap bill, I think,
would be a perfect solution for your concerns around the lack of
SBICs in the State of Nevada. Nevada is a perfect place for SBICs
to set up shop, and I think the MicroCap would address focusing
on these areas outside of the SBIC epicenters.
And it would provide, as we mentioned before, a wider on-ramp
for bringing new fund managers into the program, given that there
would be a change in the licensing process as compared to the over-
all SBIC program for these new fund managers who would be look-
ing to set up funds in the State of Nevada.
Mrs. Rodriguez Simon. I agree, although I imagine that in your
great State of Nevada there has to be at least somebody that is
qualified to join the existing program and would not need to on-
ramp through a MicroSBIC program. And I probably sound like a
broken record, but it is really all about being intentional about re-
cruiting where you need and want more capital available.
It all starts with investment managers. The investment man-
agers decide what investments they are going to make. And so if
there is nobody in the program that cares about Nevada, well, then
Nevada is not going to get any capital. If there is nobody in the
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program that really has a network within women or diverse compa-
nies, then those companies do not get capital.
And so, again, it is about really being aggressive and recruiting
diverse managers, and I do not mean diverse just women and mi-
norities but also geographically, and expanding those programs so
that there is room for additional managers. As I just discussed in
my testimony, we only use about half of the leverage available. It
is just such a wasted opportunity. This is such incredible capital
that should be going to our small businesses. We should be using
every last dollar of it. And in order to do that, we have to have
more licenses. In order to do that, the very hardworking team at
the OII needs more resources. They need more people to process li-
censes and to manage it.
Senator ROSEN. Well, thank you. I could not agree more. I would
love to see it expand in Nevada, because we also need to invest in
our minority-owned businesses, and in Nevada we have one of the
Nation’s largest Latino populations per capita, and one of the fast-
est-growing AAPI communities in the country. We are the proud
home of more than 70,000 minority-owned businesses. However,
SBA reporting says only 5 percent, just like you are saying, of total
businesses, investments go to minority-owned businesses.
So again, Mrs. Simon, in your experience, what else besides at-
tracting people to the table, how would we get them to see us? I
know we are a small State, 3 million people, but we have a lot
going on—99 percent small business, 50, 60, 70 million tourists
through our State every year. We are prime opportunity to grow
our small business.
Mrs. Rodriguez Simon. It certainly sounds like it, and it sounds
like I need to spend a little bit more time in Nevada, as a fund our-
selves.
You know, I think, Senator, it is recruiting people that have the
network and sources in Nevada. It is making it a priority, pushing
that agenda. I wish I had additional—I really think if we start
there—if we get two investment managers in Nevada in the next
two years, it will make a significant difference. We have zero now.
Let’s get one or two.
Senator ROSEN. Well, I am going to maybe reach out with you
and see how we can set up some roundtables to make some of those
things happen for my great State.
My time is up. Thank you, Mr. Chairman.
Chairman CARDIN. Well, thank you, Senator Rosen. I believe
shortly we will be joined by Senator Hickenlooper, but let me ask
a question, or just make an observation and then sort of bring us
together. We have talked about this at great length.
The SBIC allows a lender to be able to leverage private sector
investment, low-interest loans, affordability. It gives you all that
flexibility. And most of the SBIC funds will concentrate in certain
industries or certain locations. They have a strategy. And as has
been pointed out by both of you, if you do not have diversity in the
management and location, you are not going to have diversity in
where these loans are made. And I think that is absolutely a cer-
tainty.
So whether we are looking at underserved communities or we are
looking at the geographic distribution of these loans, it is critically
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important to have management that recognizes and has, as you
said, Mrs. Simon, the connections to the different communities.
So your mentorship program that you have talked about, I am
interested in that, because whether you are mentoring future man-
agers that will connect to an existing SBIC or perhaps initiate a
new license, by giving a person that represents diversity that op-
portunity we are creating the next generation of leaders that will
represent opportunities in more diverse communities.
So what has your experience shown? It looks like you have gone
through this for a while. Tell us a little bit about the experiences
of your mentorship program, and how you got it started.
Mrs. Rodriguez Simon. So our internship program?
Chairman CARDIN. Yes, I meant internship.
Mrs. Rodriguez Simon. Internship program. Sure. Absolutely.
So we started our Avante internship program just at our firm to
help support women in nontraditional backgrounds get access to
this industry. It is a very difficult industry to enter. Typically you
have to have a business degree from just a certain type of business
school, and you have to have the network to enter into this indus-
try. That is really the key.
And I understand how we got here. You know, 50 years ago, sir,
women and minorities, we were not in the place to be successful
in investment management—we did not have the education, we did
not have the access. The great news is, 50, 60 years later, we have
made a lot of progress. Many of us have been in education. Many
of us are able to access the industry.
And so we started to just create opportunities for interns to
break into the industry, and we have grown that program. We es-
tablished the first-ever diversity internship program for the SBIC.
It is called the ‘‘Small Business Investment Scholars,’’ and we have
30 interns, all women and people of color, that will be working at
25 SBIC funds. And to the credit of my colleagues, my colleagues
were very willing, very collaborative, and very excited about get-
ting a diverse intern on their team.
And so they are going to be working with this intern, giving
them incredible exposure to the industry, and putting them on a
path so that they can eventually join their firm and eventually
launch their own funds.
But these internships are incredibly important to build a pipe-
line, and the mentorship programs are incredibly important to pro-
vide guidance from established funds to funds that may have track
records but have never run a fund before. And so that collaboration
between existing funds, you know, that are willing to collaborate,
and bringing on new, diverse managers is what we are pretty ex-
cited about.
Chairman CARDIN. We might be asking you specifically if there
is something we can do in Congress as far as legislation is con-
cerned to assist in this type of program. We would welcome your
suggestions in that regard, because we are very much interested in
workable programs to improve diversity among fund managers. So
we are going to be working with you to try to see how we can ad-
vance that.
Now in Maryland we are blessed with having great leadership in
our community on women-owned businesses and on minority-
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owned businesses. We have now three Women Business Centers in
Maryland. We are very proud about that. And the SBIC penetra-
tion is pretty strong in the State of Maryland.
So let me take it from a State that already has an established
record here. What more can we do to reach underserved commu-
nities in a State like Maryland that has a rich number of minority
small businesses and women-owned small businesses, and are still
not getting the same percentage of help as the demographics would
want to indicate?
Mrs. WITTELSBERGER. You are right, Chair Cardin, that we do
have three existing, strong SBICs in the State of Maryland. I keep
going back to the MicroCap program, but there has been discussion
of this mentorship concept, which actually already exists in the
MicroCap program proposal, which would expand the require-
ments, or not loosen the requirements but allow for new fund man-
agers into the program at smaller amounts, and set them up for
success, pair them with existing SBIC fund managers who have al-
ready been successful in the program.
So, you know, expanding the program through the MicroCap bill
I think would allow for more diverse fund managers, even in the
State of Maryland, which has a strong SBIC community.
Chairman CARDIN. Mrs. Wittelsberger, that is the best introduc-
tion you could give to Senator Hickenlooper, who is now joining us,
who is the sponsor of that legislation. So Senator Hickenlooper.
Senator HICKENLOOPER. Thank you, Chairman Cardin, and I had
to jump out there so I missed about 15 minutes of your testimony,
and I apologize for that because it sounds like I missed some of the
best parts.
Certainly, as a former entrepreneur—I refer to myself frequently
as a recovering entrepreneur—the willingness, and actually the de-
sire and the healthiness of mentoring a young entrepreneur once
you have already become established and successful, it is not only
healthy and pleasurable but it really does create a healthy eco-
system. And one of the things we did in Colorado, intentionally,
was to try and take some of those mentorships out into the rural
parts of the State and try and do kick-starts by kick-starts I mean
trying to recreate the network that can provide that kind of men-
toring, in rural Colorado as well as urban Colorado.
I want to ask both of you, Mrs. Wittelsberger and Mrs. Rodriguez
Simon, to answer this, because you talked in the beginning, and I
am sure you have continued to talk about it while I was out of the
room, you mentioned the concentration of venture capital and in-
vestment in Silicon Valley, in Boston, and New York City. I think
you could probably include Seattle these days.
The question is, could a MicroCap SBIC really jump-start capital
in rural and other underserved areas, and by jump-starting I mean
create an expansion and a follow-on effort. The SBIC program is
credited with leading the way and, in essence, jump-starting or
kick-starting the broader venture capital industry. How can we use
the SBIC program to have that same impact and spur increased di-
versity in private equity and in the venture capital space, as well?
Mrs. WITTELSBERGER. I can start on that, Senator Hickenlooper.
As we have talked about today, these individuals do exist that have
the capability to run a first-time fund. So I think through the
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MicroCap bill that you have introduced this would allow us to re-
duce the potential time, which is a hurdle for a new fund manager,
potentially change the cost structure for them—it is very expensive
for a first-time fund manager to take that risk and jump to raise
a new fund, with a lot of uncertainty, and the overall licensing
process, and the time that it is going to take. And then existing re-
strictions on the specific background that you need to have between
you and your other partners in raising a fund. A lot of first-time
fund managers may not have that.
So the slight tweaks to the program, as it relates to the
MicroCap program, I think—and we are supportive of the bill—we
think that it would attract new people to the program, especially
in smaller markets that you have identified.
Senator HICKENLOOPER. Great. Mrs. Rodriguez Simon?
Mrs. Rodriguez Simon. Thank you, Senator. You know, I support
and I commend all efforts to increase diversity in the SBIC pro-
gram, and I certainly think that there is a place for the MicroCap
SBIC. However, I would really caution this Committee on relying
solely on those types of programs, and the reason I say that is that
they have historically been challenging to administer. The invest-
ment restrictions, the fund size limitations, investment committee
mandates, they make these funds inherently more challenging than
the existing, successful fund. It is harder for these smaller funds
to compete. It is harder for them to fundraise. It is harder for them
to recruit teams, because they are smaller funds.
So there are some challenges with them. However, as I men-
tioned, I do support all diversity efforts, and I do think that there
is a place for them. I just would hope that we do not rely solely
on them, and that we really focus on the large program and at-
tracting diverse managers to that program, which is already estab-
lished. It is already successful. We already know it works.
And so that is my honest opinion, sir.
Senator HICKENLOOPER. No, that is why you are here, is for that
honest, candid appraisal. And I applied for an SBA 504 in 1991.
I am on the Hall of Fame in the Denver SBA offices. But the truth
is, it drove me nuts. There was so much red tape and so much
more bureaucracy. And it is pretty clear that that is because tax-
payers do not want us to risk their money. So there are these extra
layers of what they believe is security for the investment, which,
in the end, really, I think, in many cases, drives away the better
candidates who are more deserving and would be more successful,
create more jobs, create better businesses if we got them the re-
sources when they needed it.
You both talked a little bit about the importance of patient cap-
ital. And I struggled for a long time because I was in business four
years before I could use the SBA 504, before I had enough where-
withal, and there was nobody. I had to do all friends and family,
which took me two years, at $5,000 here and $10,000 there. It is
a long story. I am sure you have each got your own long stories.
But the truth is, there is no reason why we cannot make the
processes of the Small Business Administration more efficient.
Mrs. Rodriguez Simon. Absolutely.
Senator HICKENLOOPER. Isabel Guzman, the new Administrator,
was out in Colorado last week, and so I got to spend several hours
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with her, going and talking to small businesses in northern Colo-
rado. And I think we share that recognition, that this is a time
where making sure we protect the taxpayers’ dollar, we can make
it easier and more efficient for small businesses, truly small busi-
nesses, to get that.
I just used up my own time giving a speech, so I apologize. I will
pass along my questions and make sure that you get them for the
record and get to answer them separately. Thank you. I yield back
to the Chair.
Chairman CARDIN. Thank you, Senator Hickenlooper, and we ap-
preciate your leadership on this issue, and to sort of help us reach
some of the states where we have not had as much participation.
So thank you very much for your help on that.
President Biden’s American Jobs Plan, the Build Back Better, in-
cludes a provision to help small businesses, and his charge to all
of us is to figure out how we can get capital into underserved com-
munities, and to do that particularly as it relates to startup capital,
venture capital equity. So that he recognizes that historically we
have had a challenge in reaching underserved communities, wheth-
er they are rural America, whether it is minority communities,
women-owned businesses, veteran, disabled veteran communities.
We have all these target communities, hub zones, and we recognize
that we have programs to try to deal with that, but the President
is challenging us to do better as we build back better.
So I think this hearing has been extremely helpful as to how the
Small Business Investment program can really help us in achieving
what President Biden has challenged us to do, in building back a
better and fairer America that provides opportunity for entrepre-
neurship in all communities.
So we are going to certainly use the information you all pre-
sented as we try to work with President Biden on the American
Jobs Plan. I know there are a lot of groups meeting and negoti-
ating. We are going to make sure that small businesses are prop-
erly represented in those negotiations.
Let me thank both of our witnesses for your contributions today.
We may be coming back to you with more specific requests for help
as we craft the congressional response.
The record of this Committee will remain open for two weeks. If
questions are asked for the record we would ask that you respond
in a prompt manner. And with that the Committee will stand ad-
journed. Thank you all for your attendance.
Mrs. WITTELSBERGER. Thank you.
[Whereupon, at 3:40 p.m., the Committee was adjourned.]
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