Fixing the US Capital Markets and US Entrepreneurship

The US public markets are dying. The number of US public companies fell by 46% from 1996 to 2016, despite the US economy having grown by nearly 65 percent on an inflation adjusted basis during the same period. Similarly, entrepreneurship in America is dying. The number of US entrepreneurs dropped at an alarming pace from 2006 to 2017 according to the US Census Bureau, despite the subject now being taught in US colleges and universities.

That both are dying is not coincidence. More US startups are failing because of two reasons:

  • lack of investment capital
  • the US public markets are inhospitable to smaller cap companies

As more startups fail, there are fewer to go public. Of those startups that do survive and do qualify to go public – many wait as long as possible before doing so because the US public markets are inhospitable to them. This explains why the number of US public companies has declined and the US public markets are dying.

As illuminated in my articles published by,, this public markets inhospitability to smaller companies manifests as follows:

  • Smaller cap stock valuations versus S&P 500 stocks have been crushed by Sarbanes-Oxley
  • Smaller-cap stocks are illiquid
  • Institutional investors avoid investing in illiquid smaller cap stocks
  • Smaller-cap companies have little-to-no investment analyst coverage
  • Smaller-cap companies are starving for capital; the available capital is often “toxic”
  • Gaps in SEC “short” selling regulations enable short sellers unfairly to damage smaller-cap company valuations and the companies themselves

As more startups fail and fewer go public and with the US public markets being inhospitable to smaller companies, fewer Americans are willing to quit their jobs and become entrepreneurs. This explains why entrepreneurship in America is dying.

With fewer entrepreneurs starting new businesses and fewer public companies, GDP is lower and there are fewer jobs, especially for minorities.

The root cause of this pox on the US capital markets and economy and the recommended cure will be illuminated in my comments, appearing at  recently filed with the SEC in response to the SEC “Request for Comment regarding Market Structure Innovation for Thinly Traded Securities,” Release No. 34-87327 (File No. S7-18-19).  The comments appear at the link

Thank you for your interest as we continue the struggle to keep the US public markets the world’s pre-eminent capital market and prevent the Chinese from overtaking America.


Author: Ron

Ron Woessner of Dallas, Texas is former Senior Counsel to the Financial Services Committee of the US House of Representatives where he was special advisor to the Chairman for capital markets and fintech matters. He founded Microcap Strategies building upon his 25+ years' legal and operational experience in the smaller-cap and startup company ecosphere in the capacity of General Counsel to two NASDAQ-listed companies and CEO of an OTC-traded company that he up-listed to NASDAQ.  Mr. Woessner, a certified Toastmaster, currently lectures and writes on the inhospitability of the US public markets to smaller cap companies and other capital markets topics. His articles are published by and elsewhere. He also advocates in Washington DC for policies that create a more hospitable public company environment for smaller-cap companies, enhance capital formation, promote entrepreneurship, and increase upward mobility for all Americans, particularly minorities.