Good morning, and thank you for joining me today for the Senate Committee on Small Business and Entrepreneurship hearing to examine current trends, strategies, and the significant role of venture capitalists and angel investors in America’s entrepreneurial ecosystem.

Today we will hear from one panel of expert witnesses who have substantial professional experience and knowledge in the venture capital and angel investing industries. I am looking forward to a productive discussion that will highlight the benefits of access to capital for entrepreneurs, and also focus on the serious challenges VCs and angels face in an industry which is becoming increasingly globalized and competitive. I would like to thank all of our witnesses for being here today.

As this committee has highlighted in previous hearings, access to capital is a major issue for our country’s small businesses. Whether it’s generated from an entrepreneurs’ life savings, family and friends, seed funding from an angel investor, or investment from a VC firm—funding is a vital component to help founders drive innovation and business development.

We have heard from companies who rely on funding through the Small Business Innovation Research (SBIR) and Technology Transfer (STTR) programs for R&D to solve the Department of Defense and other federal agencies’ biggest science and technology challenges.  I would like to quickly update the committee that Senator Shaheen and I am continuing to work to find a path forward for a long-term reauthorization bill that will ensure stability for the businesses involved.

While small businesses are the biggest source of jobs in the entire country, their priorities are often overshadowed by other issues. Over the course of this congress, this committee has discussed the need to promote business-friendly public policy. We closely examined subjects like tax, patents, labor, and regulatory reform in an effort to give small businesses the voice they deserve and develop solutions that will promote business growth and enhance productivity.

It’s not a secret that American start-up activity needs a spark. The Kauffman Foundation has noted in several studies that new firm formation has yet to return to pre-recession levels. While data indicates that seed-stage and early-stage startups are struggling to get VC funding in the U.S., many other countries are becoming increasingly competitive. This is especially true when it comes to disruptive technologies and attracting venture capital.  In order to maintain our American competitive edge and revive quality startup activity, we must work to encourage innovation and not stifle new industries with regulations that discourage investment and even force businesses to move elsewhere. We need to work harder to attract more investment in U.S. industries, not in companies overseas.

Today, I hope that we can take a deeper look at current industry trends and dig into the critical factors that drive VC investment. Recent midyear data from a U.S. Venture Industry Report by PitchBook, identified that over the last 18 months late-stage and “unicorn” companies with at least a $1 billion evaluation are continuing to attract the vast majority of VC investment, with a staggering $22.3 billion invested in the 2nd quester of this year. Reports like this indicate that there is plenty of capital being invested—It’s just through a smaller number of deals. I want to look into the challenges investors face to find opportunities in quality startups and what is causing this type of investment to stall in communities outside of San Francisco.

One source of investment that is absolutely critical for thousands of startups, is angel investment. These investors are known for investing their own money in firms at the seed stage that are too young to receive venture capital and often don’t even have enough collateral to receive a bank loan. Especially in communities that do not have a big VC presence, Angels help to provide the capital that smaller firms need to expand and improve productivity.

According to estimates from the Center for Venture Research at the University of New Hampshire, these investors accounted for $24.1 billion in funding last year. The companies which angels support generally need between $50,000 to $2 million and multiple individual investors are typically involved in each deal.

VCs and angels are two of the most well-known resources for startups to access capital. In order for America’s entrepreneurs to succeed, it is important that we prioritize policies that allow them to grow their business free from unnecessary government regulatory burdens.

Now, let’s get today’s conversation started. Again, I’d like to thank everyone for being here today and look forward to our discussion.