The SEC Sends Shockwaves | Series B Rounds Balloon | $1.5 Million For Legaltech

This edition looks at potential Securities and Exchange Commission-led changes governing financial disclosures by large private companies and what VCs think about it. I chat with 186 Ventures about its debut fund and the ways its founders hope to use their backgrounds to help their portfolio companies. We dive into how the amount of capital deployed in Series B rounds doubled from 2020 to 2021 and how a startup in Edmonton, Alberta looks to help make the personal injury claim process less painful. Let’s dive in.

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Earlier this week, the Wall Street Journal published a story saying that an agenda for an upcoming SEC rulemaking meeting included plans to discuss requiring large private companies to disclose more regularly, in a manner similar to the disclosures public companies make now. While this would be a drastic change, many venture capitalists say the writing was on the wall for this type of regulation. “I’m not surprised by this at all,” Peter Wagner, a founding partner at Wing VC, tells Midas Touch. “It was only a matter of time before this became a topic of discussion, and for the SEC to get interested in something like this or additional disclosure requirements.”

The cost: While Wagner thinks that additional disclosure requirements could definitely help weed out bad actors, he says the best companies haven’t been the source of the problem but will have to suffer the costs — both money and time — needed to meet the requirements. Mamoon Hamid, a partner at Kleiner Perkins, echoed that statement to Midas Touch. “Historically private companies have large VC shareholders who do their own diligence and have their own protections in place,” he says. “So, I think asking small companies to report, I think, can be tasking for young startups. It depends on how it’s implemented...

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