How the SEC is driving diversity and inclusion in private markets

How the SEC is driving diversity and inclusion in private markets

Author: The Carta Team
Read time:  29 minutes
Published date:  21 December 2021
Two leaders at the SEC talk about their priorities to bridge some of the equity divides in the private markets.

The Securities and Exchange Commission, or the SEC, was established to regulate securities markets. That includes the critical work of increasing diversity, equity, and inclusion in private markets. SEC Directors Pamela Gibbs and Martha Miller talked with Mac Conwell of RareBreed Ventures about how they’re benchmarking DE&I, the impact of 2020 on policy priorities, what to look forward to in 2022, why it’s so important to advocate for your own communities, and how to interact with the SEC.

This transcript has been edited and condensed for length and clarity.

Mac Conwell: How’s it going, everybody? I am Mac Conwell, your moderator today. If you follow me on Twitter, it’s “Mac the VC.” I am founder and managing partner of RareBreed Ventures, a pre-seed venture fund based out of Baltimore, Maryland. And I have the honor, and privilege to moderating this panel with these two amazing women, who are part of the leadership group of the Securities and Exchange Commission—the SEC, the dreaded SEC.

Today, we’re going to have a panel, and really get a chance for everybody out there in the audience to get to learn more about their offices, and what they do at the SEC. So what they do is a little different than what you think. They’re not the folks who call up Elon Musk because he says something crazy on Twitter, or who come after the startups because we’re not supposed to be raising in public, and we said the wrong thing at a conference on Twitter. It’s not what they do.

And so, for introductions, I’m going to let them introduce themselves, but we’re going to do it a little differently.

Martha Miller: I like it.

Mac: So I’m going to ask you to introduce yourself. Tell us what department you work for, and then tell us what were you doing before, and why you chose to join the SEC? For that, we’ll start with Pam. Pam, will you please tell the people who you are, and the name of your office?

Pamela Gibbs: Thank you very much. My name is Pam Gibbs, I am the director for the Office of Minority and Women Inclusion at the SEC. I’ll tell you a little bit about my office, right, Mac?

Mac: Go ahead, tell me a little bit about the office.

Pamela: So a little bit about my office. My office is responsible for all matters related to diversity and inclusion at the SEC, and that includes management, supplier diversity, and among our regulated entities. What was I doing prior? Really, actually, I would have to say that I have been in the space of equality, equity, and diversity my entire career. The only thing that’s different is that I was not always at the SEC doing the financial services industry. But my commitment to DE&I has existed my entire life.

Mac: And what made you want to join the SEC?

Pamela: One of the reasons why I wanted to join is that these offices were created by the Dodd-Frank Act in 2010. And so, having done EEO litigation as a lawyer, and civil rights as a lawyer, what I know for sure is that it’s easier to do diversity work—and equality work, and move the needle—when you have the outline of a statute. And so, when I saw that the Dodd-Frank Act had created these offices, I believe 21 of them, across the financial regulatory agencies. I at the time, was at the Commodity Futures Trading Commission doing diversity work very similar to what I do at the SEC.

But now I have the hammer. I can say, as I said, I have a statute that requires us to do some things, and that makes it easier to advocate on behalf of diversity and inclusion, because the statute is clear that we must do certain things. Because I’ve been at the SEC so long, or for a number of years, I’ve been able to go above and beyond with the statute. And that’s really, ultimately, the real pleasure in my job is going above, and beyond what the statute requires.

Mac: That’s amazing. And just to remind you, she works for the SEC’s Office of Minority and Women’s Inclusion. Who knew? I didn’t. That’s amazing.

Pamela: Who knew what? Who knew that these offices exist?

Mac: Right. Like, wow! That’s pretty incredible. Sounds like more of us should be working alongside you, Pam. And so, now is my chance to pass it off to you, Martha. Tell everybody who you are, the name of the office you work for, a little bit about what you do. And tell us: What were you doing before, and why did you decide to join the SEC?

Martha: Well, thank you, Mac. And I appreciate everyone on the whole Carta team for bringing this event together today. The topics we’re talking about are things that are near and dear to the heart of myself, as well as the team that I am fortunate enough to lead at the SEC. I am the director of the SEC’s Office of the Advocate for Small Business Capital Formation, which does not roll off the tongue. You need to take a deep breath before you try to string all those words together.

In a nutshell, we exist as a team to advocate for solutions to the challenges that are faced by companies, and their investors, from startups all the way until companies that are ready to go public, as well as smaller, public companies. And looking at how, together, entrepreneurs, and investors are building companies. And we have the absolute pleasure of getting the chance to do that with colleagues, both across the entire agency, as well as other federal agencies and with members of Congress.

It’s a fantastic area in which to be able to work, because there is always something happening. It is also, as I think most people who are tuning in know, one of the few areas of bipartisan agreement. There is widespread support for entrepreneurship, and for innovation in the country. And there’s always the question“What do we need to be doing more of?”

One of the things about our office that is really near and dear to my heart is our focus on making sure that we’re not just looking at big-picture aggregate statistics, and just the stereotypical, successful entrepreneur stories. We are really drilling in, and looking at, the specific challenges that are faced by women, minorities, those in rural communities, in places other than the traditional hubs of innovation and entrepreneurship. Because there are great ideas everywhere. There are great ideas in Baltimore, where you’re based, Mac. And there are great ideas in my home state of Alabama. But sometimes, it’s a little bit more difficult as an entrepreneur there to navigate raising capital, and finding investors.

I mentioned the Alabama roots; you can probably hear a little twinge of the accent. I turn it off a little bit, as much as I can, but it’s with me for life. I was in private practice, working for a firm that is largely southeastern in footprint, but worked with companies across the country, on capital raising deals. And so, when they called and said, “Congress created a new office. Will you come up to D.C. and build it out, and leverage the experience you have?” My immediate thought was, “I don’t want to leave my job. I love what I’m doing right now.”

And then, the more that I talked about it…I actually talked to my spouse and said, “Look, this is a strange opportunity that was presented.” He said, “Go do it. I think you’d be great at it.” So I am just in the luckiest position. I adore what I get to do, and I get to do it with a passionate team.

Mac: That’s amazing. And somehow, the SEC found two amazing women who were lawyers in previous lives to run these departments. There’s probably something to that. I just love what you’re doing, and I love the fact that Carta’s bringing us here to allow everybody in the audience to see, and hear, these different perspectives. The SEC, for most entrepreneurs and investors, that’s the boogeyman. They’re the ones who are always coming after you. They’re the ones you’re always supposed to be scared of. Everybody says, “Make sure that’s not an SEC violation.”

But no—the SEC is also doing things to help us. And these are the departments that we want to work with. Let’s jump into this a bit. One of the aims of this conference is to shed light on the existing deficiencies and related data. You both are engaged with the community regularly. What are you seeing out there? What are the disparities you’re seeing out there? What are the things that folks should be aware of, and be thinking about?

Martha: I’m happy to tackle that first, Pam, and then you want to follow?


Martha: Does that sound good?

Pamela: Yeah. That sounds good.

Martha: And this is the perfect moment for me to give a very, very SEC-esque disclaimer, which is: The things that Pam and I say today, we’re speaking as ourselves, not on behalf of the whole agency. Our Office of General Counsel requires us to give that lovely disclaimer, which just really ingrains just what lawyers we are.

Mac:I was about to say that.

How can you measure diversity without data?

Martha:Our team looks not just at the stories that we hear and what the headlines have to say. We also really try to dig in underneath and figure out what is really happening. We do that through a number of different ways—with our engagement, with our outreach work. We also hone in on data, because we think that data—like the data in Carta’s most recent report that was released today, as well as other reports they have previously released—are really critical for making informed decisions. Because we aren’t going to figure out how to move the needle, unless we measure where we are today. To benchmark, and to set goals, and to hold ourselves accountable for the future: I think that’s absolutely critical.

There’s the book, “Measure What Matters.” I am a big fan of measuring things if you want to actually see progress. So something that you will see from our office very shortly—we’re hoping to have it launched, and sent over to Congress in the next couple of days—is our annual report. We are taking data that is looking at similar issues to what Carta’s report lays out, as well as a number of other topics, and we’re trying to measure, and benchmark what it looks like to raise capital as an entrepreneur at different stages of your journey. Whether it is your initial friends and family round, seeds, Series A, Series B, your IPO. And then looking at liquidity, and what it looks like as a public company that has joined our public markets.

We try to look at each of those areas, and not just tell the big-picture aggregate story, but dive in on specific areas. Like, for example, Mac, looking at funds like yours, trying to say, “OK, that might be the big-picture number on venture capital fundraising, but what does it look like for emerging fund managers? How many new funds are being started, vs. funds four, five, six and seven?” No knocks on those funds, but we need to see new managers bringing new ideas to market, as well as incumbents for us to have a thriving market.

So we really try to splice, and not just look at the big-picture headlines, but to look at what else is happening, and what those trends really indicate. Particularly for underrepresented populations and groups who, statistically, have struggled more in finding access to investment capital.

The state of play is we are looking at all of it. We’re engaged with everything, from the first dollars in all the way to the liquidity event, trying to make sure that we are abreast of the issues that are being encountered. Pam, I’ll turn it over to you.

Pamela:Thank you, Martha. And I just want to piggyback on that: Data is so key. When you talk about diversity and inclusion, if you don’t have data, what are you measuring? When are you at a point that diversity and inclusion matters? And so data is very relevant to us, and the SEC is a very data-driven organization. It falls in line, and it is consistent with what my colleagues do across the agency.

When I think about data, we’re looking at data for the workforce. Where are the gaps? Where do we need to draw up pipelines, and build pipelines, and new skill sets for leaders to come into the organization? Where there are underserved communities, or underrepresented communities? We used data to help guide us in the utilization of minorities and women, or supplier diversity in a supply chain. And I’m pleased to say that about 40% of our vendors at the SEC for services are minority- and women-owned businesses. So it helps benchmark us on how we compare to other financial regulatory agencies.

And when I think about data—and particularly in the financial services among our regulating entities—the SEC regulates an awful lot of people, in excess of 25,000 entities. And my office collects information every two years from those entities about their leading practices around diversity and inclusion. We started this process in 2018, and we’ve done a collection in 2020. And that data is very insightful. Of all the entities that we regulate, it’s been slow to get entities to submit that data to the SEC.

That’s why, Mac, I’d like you to stop saying, “boogeyman,” and referring to us in a derogatory way. We want to encourage people to engage and partner with us so that they understand that part of the SEC—a big part of it—is enforcement, but a part of it is really reaching, and disclosing to the public investor, what it is that we value, and why diversity and inclusion is important.

What the data tells me, as it relates to the financial services industry, is that one, we’re making progress. Two, that the desire to voluntarily submit this data to the SEC has been slow. Three, it tells me that it’s hard for me to get a complete picture of exactly where we are, and where we stand around diversity and inclusion.

But the data is so instrumental in assessing. We use it also to assess our culture. What is our culture inside? Are people happy? I’m pleased to say that the SEC, we are ranked number four among federal agencies. So I like to say that our employees are fairly happy. But the data helps us to guide on what new initiatives we want to do to make everyone feel like they are connected to our culture.

The “call to action” for diversity after 2020

Mac:That’s incredible. And, I think, one of the reasons why this panel came together is because, what you just said, there are a lot of people in the marketplace who are complaining about regulations and changes. Myself included. I have many complaints. But it sounds like, in order for us to really change things, it’s not so much that we need to be adversaries as much as we should be working together.


Mac:And there are offices like the two of yours that we really need to be engaging with. But, again, I’d never heard of either of these offices until I met Martha. So this sounds like there’s more that we can be doing and more that we should be doing. So I hope that all the individuals out there currently listening will decide to engage, and share that data, because we need these changes to come.

But when we look at both public and private sectors, there’s an increasing focus on broadening access, and increasing diversity and inclusion, in every measure: employees, ownership, and access. But progress is slow—both of you just mentioned this. What are some of the policy changes you think will help? Or ones you believe will be pursued by the commission, or other regulatory bodies, or by Congress in the near future that those in the audience should be able to look forward to? And so with that, I’ll pass this off to Director Gibbs this time to start us off.

Pamela:So I think, let me first, before I get to your specific question, I’ll start with the background. We’ve made so many strides inside the SEC, and outside the SEC, around diversity and inclusion. I think a pivotal moment though, was 2020. Being at home, the George Floyd killing really was a call to action by many people. And we really saw that in the financial services industry. And so, I think, what we’re seeing now is still keeping that momentum up.

Some of the policy changes that you’re going to see—that our current chair, Chair Gary Gensler, has indicated in his regulatory agenda—is more disclosure. The SEC, at heart, is a disclosure agency. I think you’re going to see more mandates and more disclosure around diversity and inclusion as it relates to our publicly traded companies, and in the entities that we regulate, in the form of human capital management. Is diversity material to human capital management? What does the composition of your workforce look like?

I think we’re going to see a lot more diversity—and Chair Gensler has indicated this—disclosure around corporate board diversity. And I’m so pleased that the commission approved the Nasdaq diversity proposed rule that went into effect in August. That was a bold move by Nasdaq. And, I think, it’s having a tremendous impact on the industry. I just read an article in Black Enterprise that said that since the Nasdaq—since George Floyd’s killing, actually, in 2020—there’s been a 30% increase in minority new corporate board members.

So, I think, we’re going to still see some more in the space of corporate board diversity, and probably some in the space of asset management. Because that’s an area that the SEC has looked at. We held a wonderful panel last year on increasing the utilization of diverse asset managers in the industry. Those are some of the policy things. 

And of course, we cannot finish the discussion without talking about the E, the S, and the G. So I think that we want to see a lot in the space of ESG (environmental, social, and governance) investing that’s going to be moving towards more inclusion, and more diversity, as a consideration to businesses’ best practices. Not just as social justice, the S, but really thinking about environmental justice, or thinking about governance. So I think that, that’s some of the things that we can expect to see. And the chair has been very open about his regulatory agenda, particularly in the space of diversity and inclusion.

Mac:Awesome. And Director Miller?

Martha:Yeah, just piggybacking on that, and please, I am Martha, Mac. Director Miller is…that’s written on a business card, somewhere, that I don’t hand out. I am Martha.

Mac:OK, Martha.

Martha:So, yeah. I got to go to first names. That’s my personality. This is a conversation, this is not an interview, so I am Martha, how about that?

Mac:Fair enough. Fair enough.

Martha:All right. So for those who are curious, and thinking, “OK, wait. Policy changes, what am I supposed to be expecting?” You’re used to reading about Congress looking at some legislation, you might have a clue about what they’re looking at before something’s passed. Similar things happen on the regulatory front; it just doesn’t necessarily happen in the view of a lot of people.

So one of the things that’s really interesting is that our agency publishes our regulatory agenda in advance of doing anything. So we put out their list. It’s available, it’s called our “reg flex agenda,” and it says everything that we’re going to be doing in the short term, and the long term, that is on the agenda for the commission. So you can actually follow along and see things like what Pam was mentioning. You can spot different areas, and topics that are of interest to you, to make sure that you’re paying attention, and you’re engaging when comment is solicited.

As I think about the broad spectrum of issues that are being considered, Pam highlighted some of the disclosure topics. I’m going to take the question at a different angle, which is, “What changes do I think people should be thinking about?” Which is a part of your question. 

Four things that will move the needle on diversity

But I want to hone in on four specific areas we’ve identified, as a team, that we think would have a tremendous impact—not only on the ability to raise capital as a entrepreneur, and for investors to be able to support them, but to help bridge some of the equity divides that exist among different groups of entrepreneurs and investors.

So the first issue that I think we need to do more to address is the regulatory complexity when you’re trying to get started. You don’t have a lawyer on retainer that can walk you through every nuance. You’re trying to follow the rules. Most people out there—I would say 99% of people—would like to be able to say they followed the rules. 

But the rules are complicated. There’s a lot of jargon. People start speaking in citations, and talking about forming a 3(c)(1) fund, or that they’re going to do a 506(b) offering. And if you’re hearing that for the first time, you’re thinking, “Is that a convertible note that you’re using? Or, is that…What is the language?” Because the language of regulators is not the language of entrepreneurs.

And so the first area that we’re really focused on is figuring out how we can bridge some of that regulatory complexity. To make access to capital more accessible for those with great ideas, that don’t happen to have a J.D., or access to somebody that does, on a cost-efficient basis. So that’s something that we’re really focused on.

The second area that we’re really focused on is ways to help people bridge outside of their own personal and social networks to get to sophisticated and savvy investors. Because every dollar is not created equally. It is critically important that you find an investor who can financially support you, but who can also help you reach that next milestone. Whether that is customer acquisition strategy, whether that is introduction to new talent, whether that is figuring out an exit or liquidity strategy for you…you need to connect with those investors. And that’s sometimes really hard, under our securities laws with the way that communication can be labeled—and sometimes restricted. There are good reasons for a lot of it, but it has very unequal effects, depending on who you are, and the starting point of your social network, and how high net worth those individuals may be. So that’s area two that we think can do a lot to bridge some of the DE&I divide that we see.

The third area that we really see for a lot of impact, is looking at diversity among the people who are cutting checks to support early-stage investors. We heard Tristan Walker earlier today telling the story about investors not understanding the product he had. I had been following Bevel since the early days, when it was coming along. But he tells a compelling story about the fact that he came out with a straight-blade razor that just didn’t make sense to a lot of the white, male investors who didn’t have the same issues with ingrown hairs, and so they didn’t think. They thought of course, “If the market’s going to solve the problem, someone would have already done this. Procter & Gamble wound up actually acquiring them. It was such a good idea.

But what we need are more people who have walked in the shoes of the entrepreneur, who can then invest in them. And that requires looking at a number of different challenges that we see, particularly for emerging fund managers who are building their first or second fund. That person is statistically more likely to be smaller, less likely to have institutional investors. (Mac, when you came and spoke at our emerging fund managers series, you shed a lot of really good light on some of those challenges.) But that’s the third area: looking at the capital allocators, and making sure that we are not only looking at our entrepreneurs, but the investors who are equipped to back them.

The last one is looking at our public markets. Making sure that going public remains a great option for companies. And also looking at the pipeline of companies, because we need companies to go public every year. We need a lot of them, because they form the backbone of people’s saving strategy, whether it is your IRA, or your 401(k). And so, we need great companies that are coming along and joining the public market.

So we’re looking at lots of different things. Those are areas that are top of mind for us, in terms of policy areas. And, Mac, you may have feedback that you want to share on some of those topics. You’re not just in the role of our moderator; you’re welcome to share feedback there. But those are the topics that we really care a lot about in our office.

Mac:I’m going to try and stay in moderator mode for this one. 

Martha:OK, that sounds good. Kudos to you.

Mac:But, because I do have comments, but we’ll stay on this tangent for a little bit, Martha. There’s a lot of conversation going on in the chat, and there’s some things that I want to address with you.


Accredited investors, the wealth gap, and speaking up

Mac:So, when we talk about access, right? We’ve seen the access of people being able to invest in the public markets increase exponentially with apps like Robinhood. Anybody can just pick up their phone right now and go buy a bunch of Tesla stock. I could put $100 in Tesla stock right now, in the middle of this conversation. But even today, if somebody wanted to do the same, and put money in, let’s say, Rarebreed, or into a private company—they’re not able to do that, unless they’re an accredited investor. These are rules and things that were made a long, long time ago, that some might say are very antiquated.

And so, I would love to know for you, Martha, as you and your team think about that, because these issues of access, and being accredited investors, tend to affect those of underrepresented backgrounds, in far more significant ways. And so, how do you and your team think about those kinds of issues? And what are things that those in the audience could be doing to help you, as you work towards these things?

Martha:So that’s a fantastic question. I would say, if there is one topic that has gotten people the most heated on early-stage investing, it’s the accredited investor. Because functionally, it is a benchmark that has, historically, been based on your net worth. It’s based on your wealth. How much money you make in a year, or what your net worth looks like, exclusive of your personal residence. And that has been the hurdle for you to be able to participate in a lot of private deals.

There are certainly pathways that unaccredited investors can use, such as crowdfunding, as well as some other intrastate options, and some limited availability under one of the more popular private placement pathways. But by and large, the private investing space is limited to accredited investors. And there is no denying that we have a wealth gap in this country, and that that means that, by and large, most of the accredited investors are people that have existing family generational wealth—and that creates a big divide. And it’s a really big challenge.

It is something that the commission took up in the last year and a half. We actually adopted new rules, put out for comment, solicited feedback. Got a lot of feedback. Some people thought, “Do you know what? This is a standard that makes no sense, because my wealth has nothing to do with whether or not I understand the investment.” You had that perspective, all the way to people who said, “No, no. We have to make sure that when someone’s investing, they don’t lose their entire shirt on an early-stage deal.” And we know that, statistically, most startups are not going to make it and return that capital.

So you have these diametrically opposed perspectives. Ultimately, the commission decided to add a couple of additional pathways to proving that you’re accredited. Those are largely limited to financial professionals who are at firms that sponsor certain FINRA series examination licenses. But the commission did not open it up more broadly. So it’s something that, I would say, for those who are really passionate—whether it is about this topic, whether it is about fund structure, you name it—I encourage you to reach out. The thing that is the most important to know, and we’ll harp on this a little bit at the end, is that when you weigh in, and actually share your voice, and perspective when we’re out soliciting feedback, thatis how you get to better results.

That’s one of the challenges that I didn’t fully appreciate, frankly, until I was here in D.C. and I was working in this space as a lawyer. I mean, this is what I did all the time, and I was not weighing in on the rules because I thought, “Surely someone else is going to say this. Surely someone is going to document that this doesn’t work, or that this might not be quite as equitable a solution.” But unless you use your own voice, you can’t expect someone else to advocate for you, and to get the answer that you think is what makes the most sense.

If I can leave people with one takeaway, it is: Do not hesitate to be an advocate for yourself. Because if you weigh in, if you submit a comment letter (which can, by the way, be as easy as an email that you send in to the SEC on a topic), it makes a difference. We take it into consideration. We read it, and it actually does influence the trajectory.

So lots that I could say on this topic, and Pam may have additional feedback as well, but it is one that gets people fired up, for understandable reasons.

Mac:If you have any comments, Pam, I would love to hear them.

Pamela:The accredited investor—I’ve been advocating for this a while. My office partners with a lot of minority organizations, professional organizations, minority- and women-owned businesses across the board, not just for the workforce.What are the issues that you’re facing? You don’t understand what the SEC does, you don’t understand the process. We do affinity fraud; a lot of things touch investors. One of the things that I think that we tell our organizations all the time, to Martha’s point, you have to be a part of the process.

In my early days at the SEC, when I would go out and speak and be on panels, people would want to come into the SEC and meet the chair or one of the commissioners and talk about diversity and inclusion. I asked that they stop doing that. You tell me—I can do your advocacy around diversity and inclusion. When you come in and you meet with the commissioner or chair, talk about our rules. Talk about how these policies impact your membership that comes from underserved communities. If you don’t understand, then do some research. Do you understand what an accredited investor is? Do you understand the reg BI Rule? Do you understand how these things impede on our communities, underserved communities, building that wealth that we keep advocating for?

So that’s why I love partnering with Martha, because while the function of my job overlaps some, I can whisper to Martha the things that I want her to advocate for, particularly in underserved and underrepresented communities. Because a lot of people don’t understand accredited investor. But people really do need to understand it, and understand how it impacts their ability to passively participate in investing.

Mac:So, basically, what you’re telling me, and everybody who’s listening, and watching, that it’s on us to do our parts if we want this to get changed? We can’t just wait for you to do it, or complain, or tweet about it. We actually have to engage, and be part of the process.

Pamela: Yeah. And Mac, because the regulatory process is a strict process. We propose things, people provide comments, it’s suggested based upon that. Like the Nasdaq rule—we’ve been laying the foundation to comment, to comment, to comment, to comment. I mean, I can’t tell you how pleased I was when I looked at the comments and saw that so many of our partner organizations provided individual comments. Because sometimes, people want to collectively do a conglomerate, have 10 organizations. We pull them aside and say we need 10 advocates to advocate for whether this is good or bad.

And so, the Nasdaq rule was a good example of where we saw our advocates, our partner organizations over the years, particularly our minority, bar, and professional organizations, and our women organizations, come forward and comment. I thought that was a good outcome to what we’ve been advocating for. Because it’s a process. If you want the accredited investor definition to change, you’ve got to put on an alert, and get our alerts so that every time we’re doing things, you are receiving alerts about what the SEC is doing.

Mac:All right.

Pamela:Staying informed is key.

Mac:So now you’re telling me I’ve got to work side by side with you all. So come next year, don’t be surprised if you’re going to see a whole lot of me, because we got to get things changed.

Martha:I welcome you. I welcome it.

Mac:And that goes for everybody listening as well. If you feel really passionate about these things, you need to work with these two women’s departments to see that we see this through. That these are things that are really important to us, in the ecosystem that we’re all a part of.

Pamela:May I add just one thing to that, Mac?


“It is really hard to bootstrap your way to scale.”

Pamela:And that’s why, now, there’s this whole equity push in the federal government. We’re now looking at equity as a piece. We really hadn’t looked at equity. We look at diversity and inclusion, looking at our culture. But now, under President Biden, he’s really pushing the agencies to address equity. Are there areas where some communities need more help? Information? To understand our rules? And so, embedded in how we think about what we do is this whole equity piece. And equity requires my job to make sure that I’m educating and carrying out the mission, carrying out the voice of SEC to communities that I know don’t always have a seat at the table.

Martha:And if I can just drill in on that a little bit further.

Mac:Go ahead, Martha.

Martha:Our rules have equity built in. And they apply uniformly, no matter who you are. The challenge is getting people to recognize the equity piece. If you’re not starting from the same point in the race, it’s really hard to catch up. There is a notion that somehow, early-stage startup capital is an absolute meritocracy. But if you can’t get the word out, if you don’t know who to pitch to, who to talk to, and you don’t have that connectivity, it’s really hard. And it makes it all the more difficult to build that company to a successful point, and to scale, because scaling takes a lot of capital.

It is really hard to bootstrap your way to scale. There are people who can do it, but it is a rare company, and they usually occupy quite a lot of headlines for their ability to do so without investors on their cap table.

So we’re really critically focused. There is nothing about race, or gender, in any of the SEC’s rules that say, “OK, this is a different rule that applies if you look like X.” Instead, we have rules that look neutral, but they impact people really differently, depending on where they come from. And that’s an area that Pam and I are really passionate about. And we’re passionate about making sure that others, here at the agency, and NDC are aware of.

Pamela:Particularly, going back to the point of data. Do we know what underserved communities look like? How many are investors? Adding the equity lens is forcing us to look at how we look at the cost-benefit analysis of our rules. Are we including in our assessment, when we measure impact, individuals from underserved communities? What it tells us is that there are gaps, still, that remain in the data, to help us accurately advocate on behalf of all communities in our rule-making process—because that data doesn’t exist in a format that’s easy to assess and analyze.

Mac:Those are good points, and it’s great to hear going back to the data. Because we, out in the community, know, see and feel it every day. But, needing the data to back it up can sometimes be difficult, right? Some of the stuff is buried, it’s hidden, we don’t always have access. But it sounds like it’s on us to really help you get that information to make these cases, to make them stronger. And we only have a few minutes left, so anybody who has any specific questions, please put them in the chat.

How to reach out to the SEC

But I want to ask you a very pointed question. Somebody put here in the chat that they are trying to work with the SEC. They’ve submitted things, and they haven’t heard back. What do you say to folks who say, “Hey, I’m trying to be part of the process, but the SEC doesn’t seem interested in working with me?” What would you guys say to the people out there who would say something like that?

Martha:So I’m not able to keep up with the chats during this, because I’m trying to stay focused on the conversation, and once I dive into the chats, my concentration is shot, because I cannot multitask. It is not one of my skills.

Mac:That’s OK, Martha.

Martha:I am a single-task person. But what I would say is, if you feel like you are running into a wall, or that you’re not getting the attention, know this. One, I’ll just say, regulatory agencies are not known for moving at the speed of startups. We’re known for moving at the speed of government. But that said, that’s not an excuse for inaction or lack of communication. If you feel like you have reached out, or that you are trying to talk to somebody, and you’re not getting the answers you need, if there is an issue of non-responsiveness with the team—we have an ombudsman, 

If you’re trying to figure out who to even talk to, to know if you’re talking to the right people, feel free to reach out to our team. You can email You can also go to our website and find resources there. We want to make sure that we’re hearing from you. 

But I will say this: If you’ve come up with an idea for—let’s say, a great regulatory change. And say you’ve sent it to someone and said, “Look, this would be a fantastic new way to approach,” whether it’s accredited investor, or early-stage fund structure. And it’s been 12 months and nothing’s happened.

It takes time, and process, for that to rise to the level, to get onto the regulatory agenda, and to actually move. That is a process that, while it can make you feel absolutely insane some of the time, on the outside, looking at slow movement. The flip side of that is that a slow change gives you a little bit more predictability that you’re not about to have the rulebook constantly changing on you while you are playing the game. That is not an excuse for how slow things go, that is a reality of the regulatory world, which has this interesting interplay with Congress and the Commission, and other financial agencies, as well as state regulatory agencies—who are all playing in the midst on securities.

Mac:I would love to hear your thoughts on this, Pam. And just to remind everybody, Pam’s also been a civil rights lawyer, so she knows a little thing or two about this.

Pamela:When people tell me they can hear things, I like people to reach out to my office. So Because I try to point people in the right direction. I point them to Martha. I see myself as a resource because I understand, and am very sensitive. Not to say that all of the SEC is not, but I know it’s the walk that I have walked. I’m very sensitive to people that don’t have access, who say that they have barriers to access.

Being a public servant, part of my job is to make sure that people get to the right channels, that they get to the right process. I may not be able to always offer a solution, but if you’re having challenges, I can direct you to Martha, I can direct you to people that you may need. It’s a cumbersome process of trying to get a job inside the SEC, and so, we tell our candidates all the time to reach out—particularly to my office—so that we can provide them the type of support that they need, to get them along the way in our applicant process.

So I like to think that we are a resource to people. Particularly those that are listening to us today.

Martha:And I’ll use that as a jumping-off point. For those who are listening today, if you chose to be here, and listen to this panel, it means that you care about these topics. And if you are interested in becoming an advocate from within the SEC, we have a job posting that’s currently live on USAJobs. If you go to that website, that’s where you can find most every federal employment position. But we’re looking for attorneys who are passionate about access to capital, and passionate about bridging boundaries, and barriers, so that access to capital can be more equitable, and would encourage you to apply…I think the postings close this Friday, so you’d need to get on it quickly.

But there are opportunities if you’re thinking, “OK, I really want to influence things from behind the emerald curtain”—come join us. It’s a great place to work.

Mac:And so, to close this panel out, I will jump in as a panelist, and I will share a bit of a story that is very personal to me, and something I need to thank the SEC for. And so, for those who don’t know, before I started RareBreed Ventures, I worked for an economic development firm here, in the State of Maryland, that did equity investments in startups. And I started a pre-seed fund at that organization specifically for underrepresented founders.

Well, while I was doing that, I met this amazing Black woman, here in Baltimore, who had an idea for a tumble dryer that could dry a wig, or hair extensions, in 15 minutes with no heat. It was one of the craziest ideas I’ve ever heard. Really original idea. And this is an amazing woman, who had an engineering degree from Morgan State University, a master’s from Johns Hopkins. She’s an engineer. And she couldn’t get capital to build out her prototype, and start moving in the right direction.

I tried to help her, I tried to support her. Nothing. And you know what that woman did to get the capital to start building that prototype? She became a surrogate mother. She gave birth to twins, just so she could get the money to start building her product. And I became really upset, and frustrated. So what I did was, I quit my job and said, “I’m going to raise a fund.” There was a problem in that. I didn’t have a network of limited partners, the people who invested funds, to raise the money to have a proper fund. But, thanks to the JOBS Act, and the work from the SEC, there was this designation in there: 506(c).

And 506(c) allows you to publicly talk about your fund, but you can only raise money from accredited investors. Well, OK, that’s the limitation. But it allowed me to publicly talk about it. And so, because of that, I was able to use Twitter as an avenue to grow my network. And I’m happy to say, I raised a $10 million fund, thanks to that. And I was able to give that woman her first $250,000 check.

Now that took a lot of time, it took a lot of work, it took a lot of people to get the JOBS Act across the finish line. And even once that happened, that was in 2013, people weren’t really talking about 506(c). That’s more of a thing that’s become more popular in the last 18 months, or so.

But that happened because of the work from individuals like these two women here, on this panel. So, thank you for being so passionate, and caring so much about the community, and wanting to be an advocate, and helping folks. They are not the boogeyman, they are here to help. They are here to support. They are not just there to come down on folks. And so I encourage everybody who’s been able to listen, and enjoy this panel today, to get involved.

And no, it’s not going to happen in the time that we want. Startups, and funds, we move fast, we move fast, we break things. They don’t move fast, they don’t break things. They move very methodically. But if you stick with it, change will come. Change will happen. And I’m so lucky to know both of you now, and hopefully, be a part of that change in the future.

So I thank you, both, for being here with us.

Pamela:Thank you, that’s a wonderful story.

Martha:I could not have come up with a better ending. Thank you.

Pamela:Thank you.

Mac:Absolutely. And thank you, everybody, for listening in, and hopefully you enjoy the rest of the summit. All right. Bye, everybody.


The Carta Team
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