美国证券和外汇委员会妇女及少数族裔企业在规管众筹报告（英文）

WomenandMinority-OwnedBusinessesinRegulation

Crowdfunding

Researcher:MelodyChang,PhD

1

UniversityofSouthernCalifornia,MarshallSchoolofBusiness

MAY2024

CONTENTS

1.Introduction 1

2.OverviewofRegulationCrowdfunding 2

2.1.OfferingsInformationandOutcomes 2

2.2.Platforms 4

2.3.OfferingStructure 5

2.4.BusinessCharacteristics 6

2.4.1.IndustryDistribution 6

2.4.2.FirmAgeandSize 7

2.4.3.FinancialPerformance 8

2.5.Valuation 8

3.ParticipationofWomenandMinority-OwnedBusinessesusingRegCF 10

3.1.GenderandRacial/EthnicComposition 10

3.2.IndustrybyGenderandRace/EthnicityComposition 14

3.3.Pre-OfferingFinancialPerformancebyGenderandRacial/EthnicComposition 16

3.4.ValuationandTargetOfferingAmountbyGenderandRacial/EthnicComposition 18

4.RegulationCrowdfundingOutcomesofWomenandMinority-OwnedBusinesses 20

4.1.FundingOutcomesbyGenderComposition 20

4.2.FundingOutcomesbyRacial/EthnicComposition 21

4.3.SummaryandExplanationsofFundingOutcomeFindings 23

4.4.TheMaximumOfferingLimitIncreaseto$5Million 24

5.FutureOutcomesofWomenandMinorityEntrepreneursinRegulationCrowdfunding 25

5.1.RepeatParticipationinRegulationCrowdfunding 25

5.2.PerformanceafterRegulationCrowdfunding 27

5.2.1.RegulationDOfferings 27

5.2.2.BusinessandFinancialPerformances 29

5.2.3.BusinessSurvival 33

5.3.ExitOutcomes 34

6.ConclusionsandPolicyRecommendations 36

References 37

Appendix 39

Endnotes 41

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding1

1.INTRODUCTION

Womenandracialminorityentrepreneurshavehistoricallyencounteredsignificantbarrierstoaccessingcapital,a

criticalcomponentforlaunchingandscalingtheirventures.Whileonly0.5percentofnewbusinessesintheUnited

States(“U.S.”)receiveequityinvestmentsfromventure

capitalists(“VC”),

2

just2percentofthisgroupareledbyall-womenwhile10percentareledbymixedgenderfoundingteams.

3

Thesituationisevenmoredireforstartupsledby

racialminorities.BlackandHispanic/Latinoentrepreneursaggregatelyreceivedlessthan3percentofVCfundingin

2020,

4

despiterepresenting14percentand19percentof

thepopulationintheU.S.,respectively

.5

Weobservesimilartrendsinfundingbyangelinvestors.In2022,4percentofangelfundingdealswenttostartupsledbyBlackCEOsand2percentwenttoHispanicCEOs

6

.StartupsledbyfemaleCEOsaccountedfor25percentofallangelfundingdealsinthesameyear.

7

Thesestatisticsunderscoreapervasivechallengewithinthetraditionalventurecapitalfundinglandscape.Traditionalventureinvestorshavebeenpredominantlywhitemales,

supportedbyreportsrevealingthatwomenmakeupless

than20percentofVCinvestmentpartners,whileHispanicandBlackpartnersaccountforjustthreeandfourpercent,respectively.

8

Twenty-twopercentofangelinvestorsare

women,whileonepercentandtwopercentoftheangel

investorsareBlackandHispanic,respectively.

9

Thislack

ofrepresentationlikelycontributestodisparitiesinstartupfunding,asindividualsaremorelikelytomakeconnectionsandmakemarketexchangeswithotherswithsimilarsocialandeconomiccharacteristics

.10

Fundingdisparitiescanleadtopersistentinequalitiesin

theperformanceandsurvivalofstartups.Lackofaccess

tocapitalistheprimaryreasonbusinessesclose,andthe

fundingdisparityleadstoadisproportionaterateofbusinessclosuresforwomenandracialminorityentrepreneurs.While61percentofmencitedtheinabilitytoaccesscapitalasa

primaryreasonforclosingtheirbusinesses,68percentofwomencitedthesamereason.

11

Thedisparityinbusinessclosureisevenmorepronouncedbyrace/ethnicity,with95percentofHispanicand68percentofBlackentrepreneurs

closingduetoalackofaccesstocapital.Suchdisparities

notonlyhinderthegrowthofbusinessesledbywomenandracialminoritiesbutalsorepresentamissedopportunityforinnovationandeconomicgrowth.

RegulationCrowdfunding(“RegCF”)—introducedaspart

oftheTitleIIIofthe2012JumpstartOurBusinessStartups

(“JOBS”)ActandeffectiveonMay16,2016—wasdesignedtoeasesecuritiesregulationsinordertoallowstartupsand

smallbusinessestoraisecapitalfromalargenumberof

peopleviaequitycrowdfundingplatformsregisteredwith

theSecuritiesandExchangeCommission(“SEC”)andthe

FinancialIndustryRegulatoryAuthority(“FINRA”)(e.g.,

Republic,StartEngine,Wefunder),withlessregulatoryburdencomparedtotraditionalsecuritiesofferings.Specifically,it

allowseverydayindividualswhoarenotaccreditedinvestorstoinvestinstartupsandsmallbusinesses.AtitsinceptioninMay2016,RegCFenabledacompanytoraiseamaximumof$1millionduringany12-monthperiodfromanunlimitednumberofinvestors.InApril2017,themaximumlimit

wasstatutorilyadjustedforinflationto$1.07million.The

capfurtherexpandedto$5millioninMarch2021,makingRegCFamorecompetitiveoptionforstartupsandsmall

businesses.Whilesolvingfinancialdisparitiesisnotthe

primarygoal,manypeoplebelieveitwillreducebarriers

tocapitalaccess,especiallyforwomenandracialminority

entrepreneurs.Startupsandsmallbusinessescanaccessa

broader,morediverseinvestorbase,reducingtheneedtorelyonasmallhomogenouspoolofventurecapitalfirmsand

angelinvestors.

Thegoalofthisreportistodocumenttheexperiencesand

outcomesofwomenandracialminoritybusinessowners

whoparticipateinRegCF.Thenextsectionprovidesan

overviewoftheRegCFlandscape.Thethirdsectionaddressesthebusinesscharacteristicsofwomenandracialminority

businessownerswhoparticipateinRegCF.ThefourthsectionexaminesanygenderorracialdisparitiesinfundingoutcomesamongthosewhoparticipateinRegCF.Thefollowingsectionconsiderswhathappensafterwomenandracialminority

businessownersparticipatebylookingatrepeatparticipationandfuturefunding,businessperformance,survival,and

exitoutcomes.Finally,thepaperconcludeswithpolicyimplications.

2OfficeoftheAdvocateforSmallBusinessCapitalFormation

2.OVERVIEWOFREGULATIONCROWDFUNDING

ThisreportcoversRegCFofferingsfromtheregulation’sinceptiononMay16,2016,throughDecember31,2022(“studyperiod”).

12

Thistimeperiodsawatotalof5,969offeringsfrom5,211uniquebusinesses,

13

resultinginatotalof$1.4billioninfunding.

2.1.OfferingsInformationandOutcomes

ThelandscapeofRegCFhasexperiencedaremarkable

transformationsinceitsinceptionin2016,asreflectedin

Figure1.Oneofthemoststrikingshiftsoccurredin2020,

amidtheglobalCOVID-19pandemic.Duringthistumultuousperiod,thenumberofRegCFdealssurgedby62%,from

685in2019to1,133in2020.Therehasbeenadropintheamountraisedin2022,mostlikelyduetomacroeconomicconditionsincludingaspikeininterestrate,yetthedrop

appearstobesmallerthanthedropintheVCmarket

.14

Figure1.RegulationCrowdfundingOfferingsandAmountRaisedbyYear

Theyear2021alsomarkedanothermilestoneforRegCF,whichsawanuptickintheamountraisedto$449million.ThissurgealignswiththeSEC’srevisionoftheyearly

maximumfundinglimitforRegCFfrom$1.07millionto$5million,whichcameintoeffectinApril2021.Thisregulatoryadjustmentallowedbusinessownerstoaimforhigherfundinggoals,therebyattractingmoresubstantial

investmentsanddrivingthetotalraisedamounttonew

heights.Table1showsthattheaverageamountraised

perofferingescalatedtoapproximately$425,529andthemedianamountclimbedto$154,295in2021,highlightingthatbothlarge-scaleandmoretypicalofferingswereabletosecuresignificantlymorecapitalthaninpreviousyears.

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding3

Table1.RegulationCrowdfundingOfferingsandOutcomes

Year

NumberofOfferings

AmountRaised($)

AverageAmountRaisedperOffering($)

MedianAmountRaisedperOffering($)

%Funded

2016

178

25,884,477

300,982

197,211

48.3

2017

495

68,805,142

225,591

116,149

61.6

2018

735

87,128,812

193,620

93,574

61.2

2019

685

130,495,301

289,347

118,667

65.8

2020

1,133

264,108,791

333,050

143,343

70.0

2021

1,350

448,648,053

425,259

154,295

78.1

2022

1,393

412,271,420

363,876

115,250

81.3

AllYears5,9691,437,341,996336,378127,10071.6

ThemedianRegCFamountof$115,250in2022is

comparabletoangelfunding.Specifically,theRegCF

medianwaslessthanthemedianamountofangelinvestingseeddeals($121K)butgreaterthanthemedianamountof

angelinvestingpre-seeddeals($85K).However,theRegCFmedianismuchlessthanthemedianofVCfundinginboththepre-seedandseedstages,whichcomeinat$0.6millionand$3.0million,respectively.

Figure2.MedianFundingAmountbyFundingType

15

4OfficeoftheAdvocateforSmallBusinessCapitalFormation

NotallcompaniesthatparticipateinRegCFactuallyreceivefunding.Tosecurefunding,thetotalamountraisedfrom

investorsmustexceedthetargetofferingamountsetbythebusiness.Ifthetargetofferingamountisnotmet,investmentcommitmentswillbecancelledandcommittedfundswill

bereturnedtoinvestors

.16

Inthestudytimeperiod,71.6percentofallofferingsmettheirtargetamountand,thus,successfullyraisedcapital.

Insummary,asadynamicfundingmechanism,RegCF

hasnotonlyprovidedcriticalsupporttostartupsandsmallbusinessesduringeconomichardshipsbuthasalsoshownpotentialforcontinuedgrowthandsignificanceintheyearstocomewithamedianamountcompatiblewiththoseofangelinvesting.

2.2.Platforms

IntermediaryplatformsforRegCFmustberegisteredwiththeSECandFINRA.Theseplatformsprovideeducationalresourcesforbusinessesandinvestorsandfacilitate

communicationbetweenthetwoparties.Eachplatformhasitsownscreeningcriteriaandcommissionfees.

Ofthe101activeRegCFplatformsduringthestudyperiod,39platformshadatleast10RegCFofferingsand20

platformshadatleast20offerings.Thetop3leadingRegCFplatformaccountfor76percentofthemarketshareintermsoftotalamountraised.Table2showstheofferingcountandtotalamountraisedforthetop20leadingplatformsintermsofamountraised.

Table2.Top20RegulationCrowdfundingPlatforms(2016-2022)

Year

NumberofOfferings

AmountRaised($)

%AmountRaised

Wefunder

1,640

490,928,740

34.2

StartEngine

1,220

366,006,666

25.5

Republic

544

232,271,334

16.2

NetCapital

300

55,519,317

3.9

SeedInvest

295

52,485,667

3.7

AngelFunding

16

27,407,560

1.9

MicroVentures

171

27,147,755

1.9

Nextseed

124

27,014,500

1.9

Equifund

12

23,955,462

1.7

MainVest

460

22,313,319

1.6

Honeycomb

277

16,279,113

1.1

truCrowd

131

13,815,737

1.0

Dealmaker

16

11,174,909

0.8

Dalmore

19

10,667,759

0.7

SMBX

98

10,131,640

0.7

PicMii

18

6,267,757

0.4

Vicinity

13

5,700,311

0.4

RaiseGreen

19

4,673,200

0.3

TycoonoInvest

5

3,092,630

0.2

SiliconPrairie

37

2,532,450

0.2

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding5

2.3.OfferingStructure

RegCFrepresentsadeparturefromtraditionalreward-basedcrowdfundingplatformslikeKickstarterandIndiegogo.

Insteadofofferingproductsorservicesasrewards,

businessesraisecapitalbysellingsecurities.Asshownin

Table3,thereisaclearpreferenceforequity-basedsecurities(totaling78percent),withcommonstocksandSAFEnotes

beingparticularlyprevalent.Lesscommonlyusedaredebt-basedandperformance-basedsecurities,suchasrevenueandprofitparticipation.SimilartothepracticesofVCsandangelinvestors,RegCFparticipantsoftenoptforequity-based

securitiesdespitetheirhigherriskanduncertainty,duetothepotentialforsubstantiallong-termreturnsifthecompany'svalueappreciatessignificantly.

Table3.SecurityType

Count%Total

Equity-basedSecurities

Common

1,637

27.4

Limited/Non-VotingCommon

332

5.6

PreferredUnits

543

9.1

SAFE(SimpleAgreementforFutureEquity)

1,662

27.8

ConvertibleNote

479

8.0

Debt-basedSecurities

Debt

Performance-basedSecurities

932

15.6

Revenue/ProfitParticipation

351

5.9

Other

17

33

0.6

Total5,969100.0

6OfficeoftheAdvocateforSmallBusinessCapitalFormation

2.4.BusinessCharacteristics

2.4.1.IndustryDistribution

RegCFhasattractedentrepreneursacrossindustries,fromlocalbusinessestohigh-techstartups.Thestatisticson

industrydistributionsinFigure3reflectthebroadinterestinthisnewfundingmodel.Mainstreetbusinesses,such

asFood,Beverages,andRestaurantsthatcontributeto

localeconomiesandcommunities,comprise16.8percentoftheoffering.YetinnovationdrivenindustriesandhightechnologyfirmsthathavebeenthetargetindustryforVCs

andangelinvestorsarealsowell-represented.TheBusinessServices,Software,&Applicationssector,whichshowcasesnovelandscalableinnovations,accountsfor9.8percent

ofofferings.ConsumerProducts,Good&Services,whichincludeshardwareandinnovativeconsumerproducts,

represents8.7percentoftheofferings.Healthcareand

Pharmaceuticals,makingup7.1percent,andtheEnergysector,at3.8percent,aresimilarlyaimedatbreakthroughsinmedicineandsustainableenergy,respectively.FinancialServicescompaniesalsofeatureintheRegCFlandscape,makingup5.6percentofofferings.

Figure3.IndustryDistribution

18

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding7

2.4.2.FirmAgeandSize

MostfirmsthatseekfundingthroughRegCFarerelativelyyoung,withnearlyhalf(48.4percent)twotothreeyears

oldandapproximatelyoneinfive(19.9percent)lessthanayearold,asshowninFigure4.ThissuggeststhatRegCFisparticularlyattractivefornewercompaniesintheirnascentstageswithcapitalneededtofuelgrowth.

Intermsofbusinesssize,Figure4illustratesthatsmallfirmswithtwotothreeemployeesconstitutethelargestgroup,at44.2percent,followedbythosewithfourtofiveemployeesat16.8percent,andsixtotenemployeesat16.1percent.

ThissuggeststhatRegCFispredominantlyutilizedbymicrotosmallenterprises.Therelativelylownumbersoffirms

withmorethan20employeesfurtherreinforcesthenotionthatthisfundraisingmethodislesscommonamongmoreestablishedcompanies.

Figure4.BusinessAgeandSize

BusinessAgeBusinessSize

8OfficeoftheAdvocateforSmallBusinessCapitalFormation

2.4.3.FinancialPerformance

AsdepictedinFigure5,businessesparticipatinginRegCFarecharacterizedbymodestrevenuegenerationand

apropensityforlosses,whichisnotuncommonfor

early-stagestartupsandsmallbusinesses.

19

Aroundhalfofbusinessesgeneraterevenue,withtheotherhalflikelyfocusedonproductdevelopment,marketentry,and

customeracquisition.

Intermsofprofitability,only12.0percentoffirmsreportnetprofits,suggestingthateffectivelynavigatingthepathtofinancialgainisnotthenormwithinthisgroup.While

detailedrevenueandnetprofitinformationforbusinessesfundedbyprivatecapitalarenotaccessible,itiscommon

formanypre-seedandseedstagecompaniestobepre-profitandpre-revenue.

YetRegCFisnotmerelyaninitialfundingoptionnorafallback“PlanB”forbusinesses.It'snoteworthythat

nearly20percentofbusinessesengaginginRegCFhavepreviouslysecuredVCandangelinvestorfunding.ThistrendunderscoresRegCF'sroleasadeliberatefundingstrategyforpromisingventures.

Figure5.FinancialPerformanceofParticipatingBusinesses

20

2.5.Valuation

Thevaluationamountreportedinthissectionisbasedonpre-moneyvaluationorvaluationcapdisclosedinFormCofferingstatements.

21

ThemedianvaluationforallRegCFofferingsduringtheentiredataperiodis$8.5million.Thisfigureincreasedto$13.0millionin2022,indicatingmorecompetitivestartupsandsmallbusinessesparticipatingin

thefundingprogram(Figure6).ThisamountisconsiderablyhigherthanthemedianvaluationofangelfundingandVCfundinginthesameyear,asillustratedbyFigure7.The

amountiscomparabletoseed-stageVCfundingof$11

millionin2022.ThesevaluationtrendssuggestthatRegCFisbecomingamorecompetitiveandviablefundingoptionforstartupsandsmallbusinesses.

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding9

Figure6.ValuationofRegulationCrowdfundingOfferingsbyYear

Figure7.MedianValuationbyFundingType(2022)

22

10OfficeoftheAdvocateforSmallBusinessCapitalFormation

3.PARTICIPATIONOFWOMENANDMINORITY-OWNEDBUSINESSES

USINGREGCF

3.1.GenderandRacial/EthnicComposition

ToexaminewhetherRegCFhasofferedmorefunding

opportunitiestowomenandracialminorityentrepreneurs,thefirstimportantstepistoassesswhethertherearehigherratesofparticipationamongtheseunderrepresentedgroups.

Figure8showsthebreakdownofallRegCFentrepreneursbygenderandrace/ethnicity.

23

Whenconsideringall

individualentrepreneursparticipatinginRegCF,the

proportionofwomenincreasedfrom17.3percentin2016to22.5percentin2022.TheproportionofWhiteentrepreneursdecreasedfrom83.4percentin2016to73.0percentin

2022,whiletheproportionsofAsian,Black,andHispanicentrepreneursallincreasedovertime.

Figure8.GenderandRacial/EthnicCompositionofEntrepreneurs

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding11

Figure9illustratesteamcompositionbygenderandrace/ethnicityforallRegCFofferings.Foundingteamforeachofferingisclassifiedinoneofthreegendercomposition

groups:“AllFemale,”“AllMale,”or“MixedGender.”

24

Foundingteamsledexclusivelybywomenaccountfor

13.1percentofthetotalteamsinRegCFpools.“AllMale”teamsdominatethecompositionwith72.5percentofthe

total,while“MixedGender”teamsconstitutetheremaining14.3percent.

Theresearchteamclassifiedracial/ethnicityofeachfoundingteaminanofferingintwoways.

25

ThefirstgroupingrelatestocompositionofWhiteandnon-Whitemembers:“All

Non-White,”“AllWhite,”and“MixedNon-Whiteand

White,”withthelastgroupindicatingamixofWhiteandnon-Whiteentrepreneurs.ThesecondgroupingdistinguishesBlackandHispanicmembers,whohavebeenhistorically

marginalizedinthetraditionalstartupfundinglandscape:

“AllBlackorAllHispanic/Latino,”“AllWhite,”“BlackorHispanic/LatinoonTeam,”and“OtherRacial/EthnicMix.”Here,the“OtherRacial/EthnicMix”mostlycontainsall-

AsianteamsorAsian-Whitemixteams.

Intermsofracial/ethniccomposition,“AllWhite”teams

heldamajoritywith71.3percent.“AllNon-White”teamsrepresented20.5percent,whilethelastpiechartshowsthat,withinthisgroup,“AllBlackorAllHispanic/Latino”teamsaccountfor11.2percent.TeamswithatleastoneBlackorHispanic/Latinomembermakeup4.1percentofthetotal.

Figure9.GenderandRacial/Ethnic

CompositionofFoundingTeamsParticipatedin

RegulationCrowdfunding(2016-2022)

GenderComposition

Racial/EthnicComposition

12OfficeoftheAdvocateforSmallBusinessCapitalFormation

Figure10showsthattherehavebeenimprovementsinthegendermixovertheyears.Theproportionof“AllFemale”teamsincreasedfrom9.6percentin2016to14.2percentin2022,whiletheproportionof“AllMale”teamsdecreased

from79.2percentto68.0percent.“MixedGender”teamsgrewfrom11.2percentin2016to17.8percentin2022.TheyearlytrendshowsthatRegCFisbecomingamoreaccessiblefundingsourceforfemalefounders.

Figure10.GenderCompositionbyYear

Whenanalyzingracial/ethniccomposition,Figure11showsthat“AllWhite”teamshavedecreasedovertheyears,from82.4percentin2016to67.9percentin2022.Therehas

beenanupwardtrendin“AllNon-White”teams,whichgrewfrom11.4percentin2016to22.5percentin2022.

“AllBlackorAllHispanic/Latino”teamshaveincreased

from5.1percentto12.6percent.TeamswithBlackor

Hispanic/Latinomemberslikewisesawanincrease,from1.7percentin2016to5.4percentin2022.

Figure11.Racial/EthnicCompositionbyYear

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding13

Figure11.Racial/EthnicCompositionbyYear(Cont'd)

Whileanincreasingproportionofwomenandminority

entrepreneursareparticipatinginRegCF,theyappeartoberelativelyunderrepresentedcomparedtotheoverall

businessownerpopulation.AccordingtotheU.S.Small

BusinessAdministrationreport,women,Africa-American,andHispanicbusinessownershadsharesof37.6percent,9.9percent,and12.8percent,respectively.

26

ForRegCFtohelpimprovefundingoutcomesofwomenandminorityentrepreneurs,thereneedstobeactiveparticipationfromthesemarginalizedgroups.

ThedemographicsofRegCFparticipantsunderscoresa

criticalareaforpolicyintervention:increasingthevisibilityandaccessibilityofRegCFtowomenandminoritybusinessowners.Entrepreneursfromhistoricallymarginalizedgroupsneedtobeawareofthisrelativelynewfundingsource.

Also,inpursuitofamoredemocratizedfundinglandscape,itisimperativetoidentifyanddismantleanyexisting

barrierstoentryinRegCF.Tofacilitatethis,governmentandsupportingorganizationsmightconsidertheprovisionofgrantsorsubsidizedloansthatcanminimizeanycostsassociatedwiththefundraising,suchaslegal,accounting,andpromotionalcostsassociatedwithRegCFcampaigns.

14OfficeoftheAdvocateforSmallBusinessCapitalFormation

3.2.IndustrybyGenderandRace/EthnicityComposition

Figure12showsindustrydistributionsforthethreegendercompositiontypes.Acrossallindustries,exceptforBeauty&PersonalCare,“AllMale”teamshavehigherrepresentationcomparedto“AllFemale”teamsand“MixedGender”

teams.Industrieswithespeciallymarkedgenderdisparity

includeSecurity,Cybersecurity,&Defense;Transportation,Automotive,Aviation,&Aerospace;andEnergy,Power,&NaturalResources.Thepronouncedgendergapsinthese

industriesmayreflecthistoricaltrends,culturalnorms,andbarrierstoentrythatdisproportionatelyaffectwomenandmixed-genderteams.

Incontrast,theApparel&FashionandBeauty&PersonalCareindustriesemergeasfrontrunnersingenderdiversity

withintheentrepreneurialspace.Thesesectorsshowcase

strongfemaleparticipation.TherearealsorelativelysmallergendergapsintheFood,Beverages,&Restaurant;Fitness&Wellness;andEducation,Training,&Coachingsectors.

Figure12.IndustryBreakdownbyGenderComposition

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding15

Giventheracial/ethnicitymix,thereisageneral

predominanceoffirmsownedbyWhiteindividualsacross

allsectors(Figure13).ThisisespeciallytrueintheAlcohol,Tobacco,&RecreationalDrugs;Farming&Agriculture;

Energy,Power,&NaturalResources;IndustrialServices;andTransportation,Automotive,Aviation,&Aerospacesectors.

Thereisagreaterrepresentationof“AllNon-White”teams,whichincludesAsianentrepreneurs,inBeauty&PersonalCare;Education,Training,&Coaching;RealEstate&

Construction;BusinessServices,Software,&Applications;andMarketing&Advertising.

Ifwefocuson“AllBlackorAllHispanic/Latino”teams,weseethesmallestracial/ethnicgapinMainStreetsectors,suchasBeauty&PersonalCare;RealEstate&Construction;

Food,Beverage,&Restaurants;andEducation,Training,&Coachingsectors.However,inmorehigh-techand

business-relatedsectors,suchasBusinessServices,Software,&ApplicationsandMarketing&Advertising,which

hadrelativelyhigh“AllNon-White”population(whichincludesAsianentrepreneurs),BlackandHispanic/Latinoentrepreneursarestillunderrepresented.

Figure13.IndustryBreakdownbyRacial/EthnicComposition

16OfficeoftheAdvocateforSmallBusinessCapitalFormation

Figure13.IndustryBreakdownbyRacial/EthnicComposition(Cont'd)

3.3.Pre-OfferingFinancialPerformancebyGenderandRacial/EthnicComposition

Toexplorepre-offeringperformancedifferences,weexaminetheproportionofbusinessesthataregeneratingrevenueandgeneratingprofitacrossdifferentgenderandracial/ethnic

compositiongroups.

Figure14illustratesthat“AllFemale”teamshavehigherproportionsofbusinessesthatgeneraterevenueandprofit,followedby“Mixed

Gender”teams.AppendixFigureA1,whichshowstheperformance

databyyear,highlightsthat,amongthethreegendercompositiontypes,“AllMale”teamshavelowestproportionofbusinessesgenerating

revenueandprofitacrossalmostallstudyyears.Theperformance

breakdownsuggeststhat“AllFemale”teamsactuallytendtohave

betterfinancialperformancethan“AllMale”teamsgoingintoRegCF.

Figure14.Pre-OfferingFinancialPerformancebyGenderComposition

WomenandMinority-OwnedBusinessesinRegulationCrowdfunding17

Intermsofracial/ethniccomposition,“AllWhite”teams

havethehighestproportionofbusinessesgeneratingrevenue,comparedto“AllNon-White”teamsand“MixedGender”teams,althoughthedifferencesaresmall(Figure15).Yet

“AllNon-White”teamshavethehighestproportionoffirms

generatingprofit.Wefindsimilartrendswhenwefocuson

“AllBlackorAllHispanic/Latino”teams,ashighlightedinthesecondchartofFigure15.TeamsthatconsistofAllBlackorAllHispanic/Latinofoundershavethehighestproportionofbusinessesgeneratingprofit.

Figure15.Pre-OfferingFinancialPerformancebyRacial/EthnicComposition

YearlytrendsshowninAppendixFigureA1showthattheracialgapinrevenueoutcomeshasbeenconvergingover

time.While“A