On January 8, 2026, the SEC’s Small Business Advocacy Office issued their annual report addressing the state of small business capital formation. The report provides a snapshot of what is happening with small businesses across the U.S. The U.S. is home to 36.2 million small businesses that make up 46% of private sector employment. These small businesses created 9 out of 10 net new jobs from 2023 to 2024. The report notes that those entrepreneurs who have strong support and mentorship networks are generally more successful, have more resilient business plans, and maintain greater confidence.

In examining pre-seed and seed financing data, the average pre-seed round was $50,000 - $250,000 and the average seed round was $1 - $5 million. The report highlights that most small operating companies rely on Regulation D to raise capital with $378 billion raised in Rule 506(b) offerings and $24 billion raised in Rule 506(c) offerings for the twelve months ended June 2025. Only $300 million and $235 million was raised under Rule 504 and Crowdfunding, respectively. Not surprisingly, pooled investment vehicles predominantly rely on Rule 506(b) to raise capital with $1.9 trillion raised during that same twelve-month period. Venture capital funds remain active with VC firms deploying $215 billion in capital across 14,000 plus deals in 2024. While initial public offerings remain low, the trend is on an upward trajectory with 180 IPOs during the first half of 2025, raising $28 billion as compared to 102 IPOs raising $19 billion during the first half of 2024.

The annual report contains a wealth of data and information about small business capital formation in the U.S. across company lifecycles, demographics, and geographic regions. It provides insights into who is raising capital, how they are raising it, where they are raising it, and ways to be successful at it. You can view the full report here. It is worth the read.