Making IPOs Great Again: SEC Initiatives to Improve Small Business Capital Formation

Now that the SEC has proposed rulemaking permitting semiannual reporting, companies should consider what changes might be coming as next steps. Semiannual reporting is likely only the first step in a potentially major overhaul of the SEC rules, with a particular emphasis on making it easier and more efficient for smaller companies to go and access the U.S. capital markets.

During the April 2026 meeting of the Small Business Capital Formation Advisory Committee, members and speakers outlined several ideas aimed at supporting smaller companies not only in going public, but in thriving as public companies. Below, we summarize the key takeaways.

The Declining IPO Pipeline

Chairman Atkins emphasized that one of his highest priorities is to “reinvigorate an IPO pipeline that has diminished by roughly 40% since the mid-1990s.” The trend in the number of IPOs and the amount raised by corporate issuers has been declining, with investor dollars in those offerings mostly flowing to SPACs and mega-IPOs, rather than traditional capital-raising events for growing companies.

Among companies that do go public, investments tend to be concentrated within the same one or two industries. As Chairman Atkins summarized, raising capital in the public markets should not be a unicorn-only privilege. Today, companies tend not to go public, if at all, until after their Series E round in private fundraising, whereas 20 years ago, an IPO would have been the equivalent of today’s Series B or C. Chairman Atkins indicated that the regulatory framework should enable companies at all stages of their growth, and from all industries, with the opportunity for an IPO, “particularly one that represents a capital raising mechanism for the company rather than a liquidity event for insiders.”

Going Public: Making IPOs Great Again

Committee members discussed several proposals to make IPOs more accessible for smaller companies. A recurring theme was removing bottlenecks and accelerating timelines so smaller companies can capitalize on open market windows. Suggestions included:

• Reducing or eliminating the 15-day waiting period between public filing and roadshow commencement.
• Permitting tiered SEC review of registration statements, similar to the approach used for S-3 registration statements, with better transparency around frequently raised comment topics.
• Making registration statements simpler and shorter for companies with smaller market caps or lower revenue, including by expanding scaled disclosure, simplifying compensation disclosure, and reevaluating S-X Rule 3-05 thresholds regarding acquisition financials.
• Reevaluating EGC eligibility thresholds and extending the post-IPO period—potentially to 10 years—to provide a longer on-ramp for newly public companies.
• Simplifying filer status rules could help companies take advantage of smaller reporting company benefits.

Committee members also highlighted that the current IPO process typically requires 6-12 months of preparation time before a company receives any valuation feedback from investors. This particularly hurts smaller issuers, where the cost-to-benefit ratio is already tight, and may help explain why small-cap companies have gravitated toward SPACs, which offer more valuation discovery earlier in the process. Members pointed to the UK Financial Conduct Authority’s Pre-Deal Investor Education (PDIE) framework as a potential model. The PDIE framework permits underwriter equity research analysts to prepare and distribute preliminary research to institutional investors and to conduct structured “pilot fishing” conversations well before a formal IPO commitment. Creating a similar safe harbor under the U.S. Securities Act could allow for earlier price discovery and make IPOs a more attractive option for smaller companies considering an exit event.

The Private Markets “Champagne Problem”

Committee members discussed whether making IPOs more attractive necessarily means making private markets less so. Several noted that reducing public company friction may not be sufficient—private markets now efficiently provide capital and liquidity through continuation vehicles, tender offers and structured secondaries, so stakeholders no longer consider IPOs an end goal. Making it easier to be public is necessary but may not be enough if companies have fully functional alternative secondary markets.

Members also highlighted the asymmetry between private and public markets—a company can raise billions through Rule 506(c), accumulate thousands of beneficial shareholders through funds and SPVs, and operate at a multi-hundred-billion-dollar scale with minimal disclosure, while a $200 million public company shoulders the full burden of Sarbanes-Oxley Act (SOX) compliance. This regulatory imbalance drives many companies away from the public markets.

Staying Public: Helping Smaller Reporting Companies Access the Capital Markets

The committee also devoted significant attention to proposals aimed at making it easier for companies to stay public and access the capital markets following IPO:

• Incentivizing analyst coverage for small issuers so that being public truly facilitates capital formation for smaller-cap companies. The committee noted that a 2024 annual report found that 44% of small- and mid-cap stocks have no analyst coverage at all. Coverage is a significant issue for small-cap companies. Without inclusion in an index, companies bear the cost of being public without the corresponding benefit of access to public markets.
• Expanding access to shelf registration, so companies are eligible at 6 months post-IPO rather than 12 months. In addition to making it easier for issuers to file shelf registrations to tap open market windows more easily, 6 months aligns with expiration of most IPO lock-up periods.
• Revising well-known seasoned issuer (WKSI) eligibility criteria and extending EGC status to at least 10 years post-IPO.
• Reforming shareholder litigation. Members noted technology now monitors stock price drops, making even well-run companies vulnerable to opportunistic suits. One speaker suggested adopting a “loser pays” framework, similar to Canada’s, to minimize frivolous litigation.

The Road Ahead

The Advisory Committee’s discussion signals significant regulatory changes may be on the horizon. Chairman Atkins’s agenda represents a comprehensive effort to rethink the public company regulatory framework, focusing on reducing barriers for smaller issuers and making public markets competitive with private alternatives.

Market participants should watch for proposed rules on EGC accommodations, filer status simplification, registered offerings reform, and other measures reshaping public market access. These proposals are no longer appearing on the OIRA dashboard, indicating SEC proposed rulemaking may be imminent.