Today [February 9, 2022], the Commission is considering rules and amendments under the Investment Advisers Act to improve the efficiency, competition, and transparency of the activities of private funds’ advisers. I support this proposal because, if adopted, it would help investors in private funds on the one hand, and companies raising capital from these funds on the other.
Why do private funds matter?
First, they matter because they’re large, and they’re growing in size, complexity, and number. These funds, including hedge funds, private equity funds, venture capital funds, and liquidity funds, currently have approximately $18 trillion in gross assets.
Beyond their size, though, these funds matter because of what, or who, stands on either side of them. The funds pool the money of other people: the limited partners. And who are those limited partners? Sometimes, they’re wealthy individuals. Often, though, they’re retirement plans, like state government pension plans, or non-profit and university endowments. The people behind those funds and endowments often are teachers, firefighters, municipal workers, students, and professors.
And who are the people on the other side of the private funds? They’re entrepreneurs, trying to turn big ideas into big companies. They’re small business owners looking to hire employees, invest in new technologies, and grow. They’re the managers of late-stage companies, bought and sold by private equity firms.
