    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                       INVESTING IN AMERICA: HOW PRIVATE EQUITY
                                  EMPOWERS MAIN STREET

    =======================================================================

                                    HEARING

                                   BEFORE THE

                            SUBCOMMITTEE ON ECONOMIC GROWTH,
                                TAX, AND CAPITAL ACCESS

                                     OF THE

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD
                                  JUNE 5, 2025

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 119-013
                 Available via the GPO Website: www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    60-591                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                       HOUSE COMMITTEE ON SMALL BUSINESS

                        ROGER WILLIAMS, Texas, Chairman
                            PETE STAUBER, Minnesota
                            DAN MEUSER, Pennsylvania
                             BETH VAN DUYNE, Texas
                               JAKE ELLZEY, Texas
                             MARK ALFORD, Missouri
                             NICK LALOTA, New York
                            BRAD FINSTAD, Minnesota
                              TONY WIED, Wisconsin
                          ROB BRESNAHAN, Pennsylvania
                              BRIAN JACK, Georgia
                             TROY DOWNING, Montana
                 KIMBERLYN KING-HINDS, Northern Marina Islands
                             DEREK SCHMIDT, Kansas
                            JIMMY PATRONIS, Florida
                   NYDIA VELAZQUEZ, New York, Ranking Member
                           MORGAN MCGARVEY, Kentucky
                           HILLARY SCHOLTEN, Michigan
                          LAMONICA MCIVER, New Jersey
                            GIL CISNEROS, California
                           KELLY MORRISON, Minnesota
                            GEORGE LATIMER, New York
                             DEREK TRAN, California
                           LATEEFAH SIMON, California
                           JOHNNY OLSZEWSKI, Maryland
                            HERB CONAWAY, New Jersey
                        MAGGIE GOODLANDER, New Hampshire

                     Lauren Holmes, Majority Staff Director
                     Melissa Jung, Minority Staff Director

                               C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Beth Van Duyne..............................................     1
    Hon. LaMonica McIver.............................................     2

                                   WITNESSES

    Mr. Jordan Bastable, Co-Founder and Managing Director, LongWater,
      Dallas, TX.....................................................     5
    Ms. Sarah Fields, Chief Executive Officer, Jetta Corporation,
      Edmond, OK.....................................................     6
    Ms. Senofer E. Mendoza, Founder, General Partner, Mendoza
      Ventures, National Advisory Committee for Innovation and
      Entrepreneurship, Brookline, MA................................     7

                                    APPENDIX

    Prepared Statements:
        Mr. Jordan Bastable, Co-Founder and Managing Director,
          LongWater, Dallas, TX......................................    23
        Ms. Sarah Fields, Chief Executive Officer, Jetta Corporation,
          Edmond, OK.................................................    26
        Ms. Senofer E. Mendoza, Founder, General Partner, Mendoza
          Ventures, National Advisory Committee for Innovation and
          Entrepreneurship, Brookline, MA............................    28
    Questions for the Record:
        None.
    Answers for the Record:
        None.
    Additional Material for the Record:
        New York Times Letter........................................    38
        UnionLeader Letter...........................................    43

         INVESTING IN AMERICA: HOW PRIVATE EQUITY EMPOWERS MAIN STREET

                                  ----------

                             THURSDAY, JUNE 5, 2025

                  House of Representatives,
                   Committee on Small Business,
                       Subcommittee on Economic Growth,
                                       Tax, and Capital Access,
                                                        Washington, DC.
        The Subcommittee met, pursuant to call, at 10:00 a.m., in
    Room 2360, Rayburn House Office Building, Hon. Beth Van Duyne
    [chairwoman of the Subcommittee] presiding.
        Present: Representatives Van Duyne, Bresnahan, McIver,
    McGarvey, Latimer, Conaway, and Goodlander.
        Also Present: Representatives Williams, and Wied.
        Chairwoman VAN DUYNE. We are going to go ahead and open our
    meeting this morning with our Chairman giving our prayer and
    our Pledge.
        ALL. I pledge allegiance to the Flag of the United States
    of America, and to the Republic for which it stands, one
    nation, under God, indivisible, with liberty and justice for
    all.
        Chairwoman VAN DUYNE. So, good morning, everyone. I now
    call the Committee on Small Business to order. And without
    objection, the Chair is authorized to declare a recess of the
    Committee at any time. Pursuant to Committee rules, I ask
    unanimous consent that Representative Wied be waved on to this
    hearing for the purpose of asking questions. Without objection,
    so ordered.
        I now recognize myself for my opening statement.
        Well, welcome to today's hearing, Investing in America and
    How Private Equity Empowers Main Street. And first, I want to
    thank our witnesses for all being here today. We know that you
    have traveled a long way to share your experiences and your
    perspectives, and we greatly value your time and your voice.
        Small businesses are the foundation of our communities and
    the driving force of the American economy. And whether it is a
    family-run distribution center, a growing manufacturer, or a
    tech startup finding its footing, these businesses are
    responsible for nearly two-thirds of the new job creation in
    America.
        In North Texas, we have seen how entrepreneurs and small
    family-run businesses alike can build long-lasting enterprises
    and often outcompete their larger counterparts. Today's hearing
    will explore how private equity serves as a critical tool in
    helping entrepreneurs gain access to capital and enjoy the
    benefits of a long-term partnership with investors that help
    them navigate challenging barriers with expertise and key
    resources.
        From day one, the Trump administration has worked with
    congressional Republicans to roll back the burdensome
    regulatory red tape that for too long has blocked private
    capital from reaching the businesses that need it the most. And
    by removing those unnecessary barriers, we can ensure that
    investors and entrepreneurs have the ability to make crucial
    investment decisions in our communities.
        In 2024, 85 percent of all private equity investments went
    to supporting small businesses. And these investments are
    driving local job creation, strengthening operations, and
    fueling business growth to new levels. Unlike traditional
    funding methods, private equity can bring more than just
    capital and allow businesses to scale up, adopt new
    technologies, and strengthen their workforce. Across every
    state and congressional district, private equity is empowering
    American entrepreneurs to build and expand their businesses
    from the ground up.
        But for far too long, private equity has been concentrated
    in places like Silicon Valley, New York, and Boston. And now
    cities like Dallas and Austin are emerging as dynamic hubs for
    private equity investors and those seeking investment in small
    businesses. In fact, the downtown Dallas area represents one of
    the fastest growing innovation and investment corridors in the
    country.
        And I am pleased to be able to hold this hearing today to
    highlight the role of private equity in the small business
    ecosystem and discuss how we can bring these opportunities to
    more Americans throughout the country. And thank you again for
    being here today and I look forward to the conversations ahead.
        I now want to recognize the distinguished Ranking Member
    from New Jersey, Ms. McIver, for her opening remarks.
        Mrs. MCIVER. Thank you so much, Madam Chair. Good morning
    to everyone.
        Small businesses are an essential part of the American
    economy. They account for more than 40 percent of U.S. GDP,
    create approximately two-thirds of new jobs, and employ nearly
    half of all private sector workers. Financing and access to
    credit is a central component to starting and growing a small
    business. Traditionally, small businesses have been more
    reliant on bank financing for their credit needs than large
    businesses. But as we will explore today, in recent years,
    small businesses have increasingly relied on private forms of
    investment and credit to meet their financing needs.
        As we heard at previous full Committee hearing in April,
    the SBA's SBIC program is a responsible and effective method
    for small businesses and startups to partner with private
    equity and venture capital investors. Currently, the SBA
    partners with more than 300 privately owned and managed SBICs
    to provide financing to small businesses with private capital
    the SBIC has raised through the SBA guarantee debenture.
        As of 2024, the SBIC program has made more than 194,000
    investments and deployed more than 130 billion of capital to
    small businesses. More broadly, private funds like private
    equity, private credit, and venture funds have become a
    critical component of our small business financing ecosystem,
    particularly those businesses that need retooling or just on
    the cusp of growth. For example, the private equity industry
    invested in 18,000 businesses in 2022, 40 percent of which had
    fewer than 50 employees. Likewise, in 2022, venture capital
    activities surpassed the 200 billion mark, reaching 209.4
    billion, making 2022 the second highest year ever for VC
    investment.
        So while there is no doubt that the role private funds play
    in the American economy and America's small businesses is
    significant, these funds can also present significant risk for
    small businesses, their employees, and their communities. It is
    important to note that these funds have drawn significant
    criticism over the years for the strategies they at times
    choose to employ. And unfortunately, like with conventional
    bank loans, if we look at these numbers more deeply, the
    research demonstrates that women, minority-owned, and small
    business outside certain geographic areas have less access to
    private funds than their white-owned counterparts.
        For example, Black and Hispanic female entrepreneurs
    receive less than 1 percent of all venture capital investments
    in 2022--in 2020, excuse me. That must change. Investing in all
    of America's small businesses and startups benefit not only
    those businesses, but the communities they service and our
    nation's entire GDP. I look forward to exploring all of these
    issues and more to ensure our private markets are appropriately
    regulated, transparent, and working for the long-term benefit
    of our small businesses and our employees.
        With that, Madam Chair, I yield back.
        Chairwoman VAN DUYNE. Thank you very much.
        I now recognize the Chairman of the full Committee from the
    great state of Texas, Chairman Roger Williams for an opening
    statement.
        Mr. WILLIAMS. Thank you, Madam Chair. Thank you for calling
    this hearing and also thank you to all the witnesses who have
    come here today, especially the ones who traveled all the way
    from the great state of Texas.
        As a small business owner myself and an advocate for
    entrepreneurship, I have seen firsthand the critical role small
    businesses play, not just as job creators, but as engines of
    innovation and community development. From local manufacturers
    to family-owned retailers, small businesses drive the America's
    economy. Yet too often, these businesses face significant
    barriers when it comes to securing the capital they need to
    grow, compete, and reinvest in their business. So that is where
    private equity can play a crucial role. When done right, it is
    more than just an investment. It is a partnership in helping
    businesses scale up, hire more workers, and stay competitive in
    a growing marketplace.
        Private equity is a powerful and at times misunderstood
    tool in this landscape. It can provide more than just funding.
    It brings strategic support, operational expertise, and long-
    term partnership. So for small businesses navigating complex
    markets and evolving challenges, that kind of backing can mean
    the difference between stagnation and scalable success.
        Here on this Committee, it is our goal to ensure small
    businesses across America compete for private investments. When
    private investors look at small businesses outside of the
    traditional coastal elite hubs, everyone wins. Whether it is a
    rancher in Texas or a banker--or a baker in Iowa, the
    entrepreneurs present a prime partnership opportunity for
    private equity firms.
        So this is especially true in sectors critical to national
    security, like manufacturing. The revitalization of American
    manufacturing will ensure that American economy remains
    resilient. It also presents an opportunity for private
    investors to identify reemerging manufacturing sectors poised
    for growth.
        So many small businesses may be at the stage where they are
    ready to seek private investment, but sometimes they may not
    yet be in a position to attract private equity investments.
    This is where the SBA comes into play. So just last month, I
    introduced H.R. 3174, the Made in America Manufacturing Finance
    Act of 2025, a bill that would raise the maximum SBA loan for
    American manufacturing from 5 million to 10 million. This will
    not only enable existing U.S. manufacturers to grow their
    business, it will help bring more manufacturing back to the
    U.S.
        So this Committee, alongside the Trump administration and
    Administrator Loeffler, will once again prioritize policies
    that support Main Street America. Now we all can create an
    environment for Americans where small businesses can thrive and
    unleash the full potential of private equity investment.
        So I want to thank again the witnesses for being here. I
    want to thank my colleague Congresswoman Van Duyne for holding
    this hearing, and I look forward to our conversation ahead.
    Thank you.
        Chairwoman VAN DUYNE. Thank you very much, Mr. Chairman.
        I will now introduce our witnesses. Our first witness here
    with us today is Mr. Jordan Bastable. Mr. Bastable is the
    cofounder and managing director of LongWater in Dallas, Texas.
    Mr. Bastable cofounded LongWater in 2009 following years of
    experience as a consultant with FTI Consulting and as a senior
    finance manager with Lineage Power. Prior, Mr. Bastable
    cofounded a private investment firm while he was still in
    college, while also working for a multibillion-dollar million
    hedge fund where he gained experience in day-to-day operations,
    deal flow, and investment management aspects of running an
    investment firm. Mr. Bastable graduated from Texas Christian
    University----
        Mr. WILLIAMS. Go Frogs.
        Chairwoman VAN DUYNE.--where he earned a bachelor of
    business administration. Thank you for joining us today and I
    am looking forward to our important conversation.
        Our next witness here is Ms. Sarah Fields. Ms. Fields is
    the chief executive officer at Jetta Corporation in Edmond,
    Oklahoma. Ms. Fields joined Jetta Corporation in January of
    2015 with decades of experience in business development and
    marketing consumer products. She previously served as a senior
    vice president and then as president at Century LLC. Ms. Fields
    graduated from Cameron University with a bachelor of sciences
    in engineering technology and earned her master's of business
    administration from the University of Oklahoma.
        And thank you for joining us today and I am looking forward
    to today's important conversation.
        I will now recognize the Ranking Member from New Jersey to
    briefly introduce our last witness appearing before us today.
        Mrs. MCIVER. Thank you, Madam Chair. I would like to
    introduce Ms. Senofer Mendoza, cofounder of General Partner of
    Mendoza Ventures, a Boston-based Pre C, fintech, AI, and
    cybersecurity venture capital firm. After having a career in
    enterprise sales and hospitality design, she began Mendoza
    Ventures to address the growing funding gap in the pre-C
    investment stage. The firm was launched in January of 2016 and
    invested in internationally in the cybersecurity, AI, and
    fintech space. She is a published author, innovator, and
    thought leader in the technology startup and VC space with a
    passion for equity and diversity.
        Ms. Mendoza, thank you for appearing before the
    Subcommittee today. We look forward to your testimony.
        Thank you. I yield back.
        Chairwoman VAN DUYNE. Thank you. We appreciate all of you
    being here today.
        And before we begin, I just want to give you just a little
    bit of background. Where do we go? I want to remind you of the
    testimony and you have 5 minutes. The Chairman is much more
    strict than I am. At 5 minutes he will cut you off, but you are
    going to hear me just kind of wrap a little bit at 5. So just
    try to hurry up and finish your testimony and conclude it.
        So I want to recognize Mr. Bastable for his 5-minute
    opening remarks.

      STATEMENTS OF MR. JORDAN BASTABLE, CO-FOUNDER AND MANAGING
    DIRECTOR, LONGWATER; MS. SARAH FIELDS, CHIEF EXECUTIVE OFFICER,
    JETTA CORPORATION; AND MS. SENOFER E. MENDOZA, FOUNDER, GENERAL
      PARTNER, MENDOZA VENTURES, NATIONAL ADVISORY COMMITTEE FOR
                    INNOVATION AND ENTREPRENEURSHIP

    STATEMENT OF JORDAN BASTABLE, CO-FOUNDER AND MANAGING DIRECTOR,
                               LONGWATER

        Mr. BASTABLE. Chairman Van Duyne and Ranking Member McIver
    and Members of the Subcommittee, thank you for holding this
    important meeting today. It is a topic I am very passionate
    about.
        My name is Jordan Bastable and I am the cofounder of
    LongWater Opportunities, a private investment firm focused on
    the lower middle market. I also serve on the board and council
    chair of the Small Business Investor Alliance, which represents
    funds that invest and support the growth of small businesses
    across America.
        Our journey began in 2009 with two complementary
    perspectives: one rooted in the experience of operating a
    family-run business in rural America, grappling with succession
    and capital constraints; the other is shaped by exposure to
    large private equity firms and the untapped potential in
    unserved markets. Together we saw an opportunity to invest in
    small family-owned businesses, especially those lacking
    succession plans and access to institutional capital.
        Our first investment, we approached over 20 banks before
    finally securing financing. However, under restrictive terms.
    That experience revealed a larger truth: small businesses
    consistently face systematic barriers to growth capital and
    those barriers are especially acute in underserved markets.
    Today, LongWater has offices in Fargo, St. Louis, and Dallas.
    We provide a range of investment solutions from controlling
    equity to direct loans. But we are more than capital providers.
    We are partners. We support our portfolio companies with
    strategic guidance, operational expertise, and access to
    networks they may not otherwise ever reach. We help businesses
    scale, professionalize, and thrive. This is not transactional,
    it is relational.
        Let me be clear. The idea that private equity succeeds when
    businesses fail is simply false. In the lower middle market,
    success comes from helping small businesses grow into larger,
    stronger enterprises that create lasting jobs and value. Let me
    give you an example. We invested in a small business called
    Excalibur Container. We take shipping containers and convert
    them to ground level offices you might see at construction
    sites or energy sites. We came into that business and really
    helped provide financial visibility for the business, expanded
    benefits, instituting 401(k)'s, comprehensive health care,
    tuition reimbursement, and programs for continuing education.
        We also invested in the infrastructure, including cleaning
    up and rehabbing old abandoned industrial sites and investing
    in new capital equipment. We also invested in modernizing their
    digital marketing strategy and bringing skills and expertise
    that didn't already exist and that they did not have the
    capital to invest in.
        This is what aligned private capital looks like: capacity
    building, local empowerment, and economic revitalization. Good
    public policy should expand, not restrict, the capital options
    available to small businesses. Whether it is a startup fighting
    for market share or a second generation manufacturer navigating
    succession or a rural enterprise facing technological
    disruption, private investment is often the bridge between
    survival and scale. In today's climate where traditional
    financing is often constrained, private capital is not just
    helpful, it is essential.
        I look forward to working with the subcommittee to ensure
    small businesses can access this kind of value-added capital
    that helps them grow higher and succeed for the long term.
        Chairwoman VAN DUYNE. Thank you very much.
        I now recognize Ms. Fields for her 5 minutes opening
    statement.

           STATEMENT OF SARAH FIELDS, CEO, JETTA CORPORATION

        Ms. FIELDS. Chair Van Duyne, Ranking Member McIver, and
    Members of the Subcommittee, thank you for inviting me to speak
    today. My name is Sarah Fields and I serve as the CEO at Jetta
    Corporation. We are a U.S.-based bathtub manufacturer and have
    been business for about 45 years, located in a suburb of
    Oklahoma City. We have about 60 employees and generate about
    $20 million in annual revenue and we have been partnered with
    lower middle market private equity firm for about 2-1/2 years.
    I want to share how that partnership has truly been an
    accelerator for our business, not just by providing us capital,
    but bringing to us expertise, support, and the kind of
    involvement you may not expect from private equity.
        We partnered with a smaller, more specialized private
    equity fund that focused on U.S.-based manufacturing. For them,
    a small business like us is not just one of many. We are a big
    deal. That means we get direct access to senior partners,
    senior partners that have manufacturing operations expertise.
    They help us make quick decisions and they are people that are
    willing to roll up their sleeves and come work in our business
    with us to help us solve problems and move forward quickly.
        Within the first year of their support, we have led to a 10
    percent increase in production capacity and 8 percent increase
    in our efficiency thanks to major improvements we were able to
    make in our factory layout and our processes. They also helped
    us uncover about $350,000 in annual material savings. That is a
    massive change for us and is really significant to a small
    business like us. We are now reinvesting those gains in
    improving our workplace, updating our facilities and
    workstations to improve retention. which is critical in our
    manufacturing environment.
        In addition, these operational improvements have made us
    more competitive with much larger companies. We are now gaining
    market share, improving profitability, and reinvesting in our
    growth.
        One of the biggest advantages for private equity for us has
    been access to capital for acquisition, not just having to grow
    organically. Without private equity, this would not have been
    attainable for us. In the next six months, we plan to acquire a
    second manufacturing facility, which will allow us to expand
    our geographical reach, shorten delivery times, and serve a
    much broader customer base across the country.
        We are also in the process of restoring the production of
    bathtubs we currently import. That move will help us improve
    our supply chain resiliency and quality control. It will also
    allow us to expand, making more American-made products. As a
    result of that, we expect to be able to increase our workforce
    about 30 percent over the next 18 months.
        Private equity partnership for us and for me personally has
    been transformative. It is helping us grow faster, operate
    smarter, and create jobs, all while staying true to who we are,
    a small American manufacturer, and staying true to our values
    and our culture.
        Thank you again for allowing me to share my story. I am
    super excited to be here and happy to answer any questions you
    may have.
        Chairwoman VAN DUYNE. Thank you very much.
        The Chair now recognizes Ms. Mendoza for 5 minute opening
    remarks.

    STATEMENT OF SENOFER MENDOZA, FOUNDER, GENERAL PARTNER, MENDOZA
    VENTURES AND THE NATIONAL ADVISORY COMMITTEE FOR INNOVATION AND
                        ENTREPRENEURSHIP (NACIE)

        Ms. MENDOZA. Thank you, Chairman Van Duyne, Ranking Member
    McIver, and Members of the Subcommittee for the opportunity to
    speak on the necessity of entrepreneurship as a cornerstone of
    American competitiveness today. I am pleased to testify today
    as the founder and general partner of Mendoza Ventures, a
    privately held venture capital firm investing in AI,
    cybersecurity, financial technology, and dual-use companies,
    and the founder and executive director of Mendoza Impact, our
    philanthropic arm.
        My family has lived the American Dream. We are self-made
    entrepreneurs who built a venture capital fund out of a
    technology exit. We live in the perspective that we are all
    trying to promote fiscal responsibility, innovative technology,
    and employing Americans to their absolute best capacity. Since
    2016, our little fund has deployed over $30 million into the
    American economy, sustained 15 portfolio companies, generated
    more than 550 sustainable full-time jobs, created 140 million
    in revenue for our portfolio in 2024 alone, and made essential
    technology for our nation's tech stack in both the government
    and the private sector. We have funded veterans, women, and
    several minorities. In fact, our portfolio looks a lot like the
    demographics of our great nation.
        We have co-invested with some of the largest financial
    institutions in the world and we have exited four companies,
    creating generational wealth for other American families
    through our company. We are philanthropists who mentor the
    funds and founders following our lead. This is the place where
    wealth is generated. Access to the American Dream is through
    private equity. Over 50 percent of millionaires attribute their
    success to the growth and scale of a family or privately held
    business.
        It is proven that liquidity constraints hinder access to
    entrepreneurship. If you want to send a rocket, you need to
    build a launchpad. You cannot disassociate main street
    stability from our nation's entrepreneurial ecosystem. They are
    completely intertwined. Venture lives in this capital stack,
    creating wealth where others won't. And the introduction of
    mega funds into an industry where the average fund size is 35
    million, coupled with a slowing IPO and M&E market, means less
    capital for smaller firms and less smaller firms.
        Since 2021, 25 percent of all active venture capital firms
    have closed. More capital is going to fewer firms, cutting out
    the middle later, and that money is not going to make it to
    main street. In contrast, A16Z closed 7.2 billion and just
    announced a $20 billion mega fund. Funds like us enable main
    street in a way that the mega funds do not. If you're deploying
    that much capital, you have to write a larger check to get it
    out in the typical 5- to 10-year period. So a startup trying to
    raise today, like my colleagues here, are facing fewer firms.
    And venture capital is facing the same statistics that we are
    seeing among the population of a growing wealth divide.
        Out of 91 billion deployed in Q1 of this year, 40 billion
    of that went to OpenAI, another 4.5 billion went to the runner-
    up, Anthropic. Now, take into account that the two funds
    leading those rounds share many LPs, endowments, foundations
    that have invested in them, and you see that we have a growing
    concentration risk in the venture capital ecosystem.
        In finance, when we have a really big problem, we like to
    call it an opportunity. Failure is learning. And if you can
    fail fast, you can learn and implement fast and beat the odds.
    Eric Ries famously says success is not delivering a feature.
    Success is learning how to solve the customer's problem. So the
    SBA has to empower and not extract. We need to start building
    more launchpads in more areas of the country in order to be
    able to launch more rockets.
        And I will use two examples on that. One is the proposed
    CDFI cuts that we are discussing today. If anything, we have
    not pushed it out hard enough to really be able to meet the
    need of small businesses. And the other example I will use is
    the great SBIC program. We went through this process and at the
    end of the process, in order to partner with the fund, there is
    a legal bill of about 100- to $150,000. For a seed stage fund
    that is an investment in an entire company.
        And so there is a couple of things that we can do. Instead
    of making sweeping cuts, we can tweak what we have. What we
    have is working. We just need to iterate on it to meet our
    small businesses and our smaller funds where they are today, so
    that they can access it. The SBI could standardize legal docs,
    like Carta and Y Combinator have put into practice. You don't
    need to cut something that just needs another iteration to
    thrive and to help our nation thrive. If we do not listen to
    the business owners we serve, we are damaging our own cause.
        We need to build an innovation economy in America. When
    that happens, entrepreneurs everywhere have capital and
    opportunity. Entrepreneurship everywhere for everyone, that is
    the American Dream.
        Chairwoman VAN DUYNE. Great. Thank you very much.
        We will now move on to the Member questions under the 5-
    minute rule, and I recognize myself for 5 minutes.
        Mr. Bastable, private equity has proven to be a powerful
    tool for helping small businesses grow and succeed
    historically. So these investments, though, that we have
    largely seen and concentrated in hubs like Silicon Valley, I
    think that trend is finally ending. I think in Texas 24th
    District alone, we have got 180 private equity-backed
    businesses. Investors like yourself are looking towards
    businesses in Texas. And as capital begins to shift toward
    emerging markets, firms like yours are at the forefront of that
    transformation.
        So can you speak to us about how your firm is helping bring
    investments into cities like Dallas and what impact that has
    had on some of the small businesses that you're working with?
        Mr. BASTABLE. Yes, absolutely. Thank you for the question.
        I would start by saying, you know, when you look at where
    our company is based, Dallas, St. Louis, and Fargo, they are
    not traditional finance hubs. And even a city like Fargo,
    people often ask why are you in Fargo?
        Chairwoman VAN DUYNE. I was going to ask, why are you in
    Fargo?
        Mr. BASTABLE. Because there is great opportunities and it
    is an underserved market, and it is unbelievable the number of
    opportunities that are seeking capital and just do not have
    access to capital in those part of the markets. And one of the
    things that is just interesting about the lower middle market
    is it is a relationship industry. They want to work with people
    that are committed to helping them grow and share the values of
    that long-term growth. And so I think it is really important
    that these businesses and these capital providers continue to
    be in the markets and the locations where they are planning to
    invest and understand the people and the values of those
    communities.
        Chairwoman VAN DUYNE. I used to live in Minot, North
    Dakota. At that point in time, it was long ago, it was not
    exactly a hub for economic activity. We had the Air Force Base
    there and that was about it. But tell me, do you have any
    stories of some of these businesses that you've worked with,
    success stories, failure stories?
        Mr. BASTABLE. Absolutely. I can tell you, in North Dakota,
    for example, we invested recently in a garage door manufacturer
    in North Dakota. We just opened up a railcar servicing location
    in rural North Dakota and are planning to open up several more.
    And these are just examples of, you know, opportunities where
    the larger private equity firms, they don't often want to fly
    and travel to these parts of the country because they are
    difficult to get to. And sometimes, you know, in reality, it is
    hard to find and retain talent and grow in those parts of the
    market. But with investments in educating the talent and
    training the talent, there are really great people in those
    communities who want to work at those businesses and can drive
    value.
        Chairwoman VAN DUYNE. Excellent. Thank you very much.
        Ms. Fields, as you testified, private equity offers far
    more than just capital. It provides hands-on support, strategic
    guidance, expertise in fields that you may not have necessarily
    within your own company. It is a partnership that is between
    investors and the small businesses, with each party, I think,
    focusing on achieving success. We all are on the same page.
        How has private equity investments helped you grow your
    business? You talked a little bit about that, but I would like
    to hear you expand further on areas like operations and
    workforce expansion and whether or not you've been able to
    enter any new markets.
        Ms. FIELDS. Yes, thank you for the question. And as you
    mentioned, it has been a true partnership for us, not just
    access to capital.
        Initially, when we first were owned by private equity, the
    main thing that they helped us do is quickly understand how to
    create a more efficient operation. We did not have as much
    expertise as we needed to understand what that meant. So for
    them to quickly come in and help us understand how to re-lay
    out our plant, how to make best use of the equipment that we
    had, not necessarily putting all new equipment into the
    facility, but making sure we were making the best use of that,
    and also how to make sure that we were using a labor that we
    had efficiently and using the inputs efficiently for us. That
    was the first thing, making sure that we could be as efficient
    as possible and allow us to compete on a level playing field.
        Secondly was about reinvesting back into our people. And
    for us, what that meant was making sure that we could make our
    work environment more pleasant to work in. Sometimes
    manufacturing can be a little bit harsh, and that makes it
    really hard to keep and retain employees on the manufacturing
    floor. There are some things that we really wanted to do before
    we had a private equity partner to make our work environment
    more pleasing to work in, and we weren't able to. We have since
    been able to do that. That has been exciting for us.
        Recently, we have expanded by taking market share and have
    expanded our business about 40 percent in the state of Texas--
    --
        Chairwoman VAN DUYNE. Great.
        Ms. FIELDS.--which is a large housing market. We serve the
    housing market, and we are presently in a year where we are
    growing about 15 percent. So we are very excited.
        Chairwoman VAN DUYNE. Great. I love to hear it.
        I am going to now recognize Ms. McIver for 5 minutes.
        Mrs. MCIVER. Thank you so much, Chairwoman.
        Mrs. Mendoza, small businesses have historically relied on
    two main sources to secure funding: approaching a bank for a
    loan or attracting investors. Why might a small business choose
    to seek investment from a private equity or a venture capital
    fund over a bank loan?
        Ms. MENDOZA. Revenue. I mean, they oftentimes don't meet
    the revenue requirements or the historical balance that you
    need in order to be able to get the service and the terms that
    you require from a bank. And so what we see is that the way
    that our financial system works, you need on ramps and off
    ramps. So a lot of the products that we invest in are around
    getting small businesses and individuals bank ready. So what
    can they do to get there? And so venture really fills that gap.
        I think one of the beautiful things about this table is you
    have the entire capital stack sitting here and we are all
    agreeing. One of the innovative technologies that we are
    investing in is solving a lot of the manufacturing issues that
    you have with digital twinning and going all over the country
    and the world, making those communication cycles much faster.
    Their revenue is not at the point that they could go to a bank
    loan and invest deeply in that technology to be able to get to
    the revenue that they need to grow.
        Mrs. MCIVER. Thank you. During my opening statement, I
    talked about African-American and Hispanic female entrepreneurs
    and how they receive just 0.43 percent of all venture capital
    investment in 2020. As a venture capital investor, why do you
    think it is so hard for these entrepreneurs and small business
    owners to access equity finance opportunities?
        Ms. MENDOZA. I think the beautiful thing about bias is it
    works two ways, right? Everyone is more likely to hire someone
    from wherever they are from. And our capital stack at this
    moment, especially in the area of venture, is really
    homogenous. So as you go up into the general partnership of VC
    firms, there are fewer women, there are fewer people writing
    the checks.
        One of the reasons I started this firm was I was in
    corporate and I had kids and it was hard. Like nothing illegal
    happened, but my basement--you know, my desk was magically in
    the basement as soon as I told them I was pregnant. And so I
    realized very quickly it was not going to change unless the
    money was coming from women, that we couldn't implement the
    changes that we needed unless we had a capital stack that was
    more reflective of our nation. Fast forward a few years, we
    have done a lot of that.
        Mrs. MCIVER. Thank you for that. For these entrepreneurs
    and small business owners to receive more equity financing
    opportunities, there obviously needs to be more opportunities
    to forge important networks with venture partners that are
    likely to invest with them. What recommendations do you have
    for how we here in Congress can help expand these networks?
        Ms. MENDOZA. I had a small business in Boston recently tell
    me that workforce development and networking was the
    government's version of let them eat cake. It was Boston, so he
    was a little harsh with his words. But what I think is we need
    to consistently partner the capital and the training and the
    networking at every single step of the capital stack in order
    to be able to scale these businesses. I think we keep trying to
    legislate the quick fix or the next thing or the thing that we
    can get done this year, this session. But this is a long-term
    approach solution that we need to implement over time. We have
    been moving in this direction for 20 years and I think we will
    continue moving here.
        Mrs. MCIVER. Thank you for that.
        Madam Chair, I yield back.
        Chairwoman VAN DUYNE. Thank you very much.
        The Chair now recognizes Mr. Wied from the great state of
    Wisconsin for 5 minutes.
        Mr. WIED. Thank you, Chairwoman Van Duyne, and thank you to
    all of our witnesses for testifying here today.
        Access to capital is essential for entrepreneurs to start
    or expand their business. Yesterday we heard from Administrator
    Loeffler, whose testimony spoke to many of the reforms the SBA
    has taken over the past several months to reform federal
    lending programs that were effectively torched under the
    previous administration. She also testified about the
    deregulation efforts being undertaken to remove the
    bureaucratic boot that has held down small businesses the past
    4 years. And I applaud her work to reform the SBA and make Main
    Street America Great Again.
        Private equity represents another important way for small
    businesses to have the capital they need to thrive. Under the
    previous administration, we saw a $1.2 trillion decline in
    private equity investments thanks to aggressive overregulation
    that led to tens of thousands of fewer private equity
    investments. Fortunately for entrepreneurs across the country,
    House Republicans and President Trump are working hard to
    deregulate and extend vital tax cuts for small businesses.
        Ms. Fields, thank you for your courage in being a leader,
    small business owner. I give you a lot of credit. Clearly,
    private equity is--they believe in you and your leadership and
    your character. So thank you for all that you do.
        Mr. Bastable, how is private equity helping small
    manufacturers remain competitive?
        Mr. BASTABLE. Yeah, it is a great question. And, you know,
    I think one of the things we consistently see with small
    manufacturers is the lack of access to innovation and new
    technologies that can help them be competitive with, frankly,
    foreign products coming into this country. And whether that is
    digital marketing or that is leveraging new tools with AI or
    upgrading their ERP system or automated manufacturing
    equipment, those are things that cost a lot of money. And you
    know, at times there are--it is too much money for those
    companies to invest in. And so we can come in and really help
    work with the teams to implement those solutions.
        Mr. WIED. Clearly a great benefit.
        Ms. Mendoza, when awarding loans to immigrants, do your
    companies use E-Verify or other federal database to ensure the
    recipients of your company's loans are in the United States
    here legally?
        Ms. MENDOZA. So we don't do loans. We do equity
    investments. And our anchor bank is Bank of America. And so the
    Bank Holding Act language is in our LPA. And so we are only
    investing in Fund III out of companies domiciled in the United
    States. In Fund II, we invested internationally, but it was a
    seed stage fund. And all of our founders go through a typical
    due diligence process, like you do when you are hiring someone,
    background checks, all those things.
        Mr. WIED. So in the testimony provided you mentioned the
    system, you know, working against certain groups of people,
    including those that didn't graduate from an Ivy League school
    or, you know, who did not live in the East or the West Coast.
    So what is the demographic breakdown of the business owners who
    have applied for--applied with you, with Mendoza Ventures? Not
    those that have been approved for investment, but those that
    have applied.
        Ms. MENDOZA. Like I said, our portfolio looks like the
    nation. So we have a--I think unquestionably we have a more
    diverse applicant pool because I am a female general partner
    out there doing this work, and like attracts like. But the ones
    that are getting through Investment Committee, out of 15
    companies, we have 2 female founders. We have a Korean-American
    founder, we have Latino founders, we have--we are lining up
    pretty well with the demographics of the United States.
        Mr. WIED. Okay. So a statistic on your website, which you
    founded and are general partner at, says 90 percent of your
    loans go to startups led by immigrants, people of color, and
    women. So if 90 percent of your loans go to startups led by
    immigrants, people of color, and women, despite only
    accounting--well, we don't know what the overall applicants
    are, would it be fair to say that you give a preference to
    people based on those factors?
        Ms. MENDOZA. No, I think it is fair to say that we give a
    preference to talent in a country where 51 percent of the
    population is female, 20 percent of the population is Latino.
    And I will have to double check my statistic, but I think it
    was 32 percent is Black. And if you are equitably distributing
    capital on a fair shake basis, that is what it should look
    like.
        I would like to ask the same question of the firms that
    have deployed to 99 percent white men at the same time. I think
    if you are deploying to any population and you are giving
    talent a chance, your deployment should look like the
    population that you are deploying to. We also have white male
    founders with great teams.
        Mr. WIED. All right. Well, thank you. And I yield back.
        Chairwoman VAN DUYNE. Thank you.
        I now recognize Mr. McGarvey from Kentucky for 5 minutes.
        Mr. MCGARVEY. Thank you, Madam Chairwoman. It is no
    question that private equity has sort of changed the landscape
    for small businesses. Over the last decade, the United States
    capital markets as a whole have enjoyed enormous growth, but a
    disproportionate share of that is going into the private
    markets rather than the traditional public equity markets.
        So I will just say I am not reflexively anti-private
    equity. I understand there is, there is a legitimate role for
    private equity firms and often providing capital to small
    businesses. But I do share the concerns of my colleagues about
    some of the private industry--private equity's consolidation in
    healthcare, and some of the industry's tactics in doing so.
        Ms. Mendoza, private equity firms have drawn criticism over
    the years for exactly some of those tactics. You know what they
    are: layoffs, selling off assets for quick cash, loading up a
    business with tons of debt, selling it off, and, you know, and
    the list goes on and on. And while these strategies can
    maximize returns for a private equity fund's investors, they
    often leave businesses, communities, workers worse off. So
    considering these well-publicized issues that we have all seen,
    what are the potential drawbacks for small businesses who
    choose to partner with private equity or private credit rather
    than going to traditional lending markets? And then what are
    the advantages?
        Ms. MENDOZA. A lot of the times business are going there
    because traditional lending markets won't serve them. So it is
    just like your personal finance. When you have money and you
    don't need money, that is when the bank is willing to give it
    to you. And so as you move down that spectrum, the terms are
    going to get more predatory. It is business.
        I think that part of the issue is also that the capital
    often is not coming from the communities. And so part of the
    reason that we are so passionate about representation across
    our entire capital stack is that when the capital comes from
    the community, you have some checks and balances in place. You
    know, in New England we fish a lot and we always say that you
    need local knowledge in order to be able to get anything. And I
    think a lot of those problems are endemic of a disconnect in
    priorities between the community and the private equity firm
    that is usually somewhere else coming in with very different
    goals. We need to pivot that to being building rather than
    extractive.
        Mr. MCGARVEY. Does seeking private capital through the SBIC
    negate some of those problems that could happen for a small
    business?
        Ms. MENDOZA. Yes, I think it does because it puts a
    standard term out there for companies that need it. And so it
    creates essentially a competition in the marketplace where you
    have a more fair product for the business owner.
        Mr. MCGARVEY. Thank you for that. And Mr. Bastable, I want
    to talk to you. I am from Louisville, Kentucky, so we are both
    from the middle of the country. In fact, I went to the
    University of Missouri and married a Jeff City girl. So have a
    connection with Missouri certainly. You know where we are from
    and we know that most of the private equity investment and job
    growth takes place on the coasts and in big cities around the
    country. Last Congress, the House passed the Investing in All
    of America Act to give SBICs bonus leverage to invest in rural
    and underserved small businesses.
        How else can Congress increase investment in under
    capitalized businesses in places like my hometown of Louisville
    or in St. Louis, Missouri, where you have an office? Is there a
    greater role for SBIC is in that?
        Mr. BASTABLE. It is a great question. And the SBIC program
    is a phenomenal program and it is amazing how much capital
    flows into these rural communities because of that program. And
    I think the bill, the Investing in All America Act, and
    increasing the leverage limit will continue to drive more
    capital into these rural communities in the middle of America
    where, frankly, it is a lot of manufacturing industrial jobs
    where they make products.
        Mr. MCGARVEY. And when you talk about increasing that
    limit, is that something you would peg to a number or would you
    peg it so it continues to move?
        Mr. BASTABLE. I think, I am a simple person, I think
    picking a number and then maybe moving it in the future would
    be the easiest path forward.
        Mr. MCGARVEY. Thank you very much. Appreciate that.
        And Madam Chairwoman, I yield back.
        Chairwoman VAN DUYNE. Thank you.
        I now recognize Chairman Williams from Texas for 5 minutes.
        Mr. WILLIAMS. Thank you, Madam Chair. And Mr. Bastable,
    again, thanks for being here.
        The Trump administration has made it clear that
    revitalizing American manufacturing is key to strengthening our
    economy and creating jobs. SBA Administrator Loeffler has
    mirrored those efforts with her Made in America Initiative,
    which rolls back burdens from regulations and supports pro
    growth policies. Therefore, many private equity firms are
    channeling critical investments into small manufacturers across
    the country.
        So how is your firm helping small- and mid-sized
    manufacturers modernize their operations and expand
    manufacturing production to remain competitive in today's
    economy?
        Mr. BASTABLE. That is a great question. And I mentioned in
    my opening statement one particular investment we have in
    Graham, Texas, which you may be familiar with. And they
    refurbish shipping containers and turn them into ground level
    offices. And one of the things we did was we invested in, you
    know, tuition reimbursement for all those employees. We
    invested in digital marketing, we invested in new manufacturing
    techniques to help them be competitive in the market. And as
    you know, Graham is not a huge city, and so it is really
    important that you create the education that is required for
    these, you know companies to retain really great talent, and to
    bring them into the community.
        Mr. WILLIAMS. Well, that is great. And so what more can be
    done, do you think, to make it easier for private equity
    investments to identify and invest in small manufacturing?
        Mr. BASTABLE. Yeah, I think the bill that has been
    proposed, the Investing in All of America, Act and increasing
    the leverage for the SBIC program is one great way to continue
    to bring capital to manufacturing businesses.
        Mr. WILLIAMS. Okay, great, thanks. Graham's home of the
    Steers. Now, remember that.
        Ms. Fields, small businesses often face significant
    challenges that can limit their growth potential. And your
    company's success shows how private equity investment can make
    a real difference in overcoming these obstacles and this also
    provides significant returns to both the investors and the
    entrepreneurs. So Ms. Fields, can you share how beneficial it
    has been to identify potential investment opportunities outside
    the traditional investment hubs, such as Silicon Valley?
        Ms. FIELDS. Yes, it is a great question. And I think that,
    you know, we are about as far from Silicon Valley as it gets.
    We are in the middle of Oklahoma and we are producing real
    product that everyday Americans need in their homes. As a small
    business owner, we have to grow. If we don't grow, we are not
    going to survive. To have private investment that allows us to
    make the investment in things that we need to make at the pace
    that we need to make them to stay relevant in our market has
    been critical to us. Without that, we would not have been able
    to do the things that we have done. We would be having to pick
    between can I hire a single person or can I invest in a piece
    of equipment? But I may not be able to do both. What this
    allows us to do is to make the investments that we need to make
    to stay relevant to our market and to do them in a way that
    allows us to accelerate.
        Mr. WILLIAMS. Also helps with a great idea we had in
    America called risk and reward. Right? You take advantage of
    that.
        Madam Chair, I yield my time back. Thank you.
        Chairwoman VAN DUYNE. Thank you very much.
        I now recognize Dr. Conaway from New Jersey for 5 minutes.
        Mr. CONAWAY. Thank you, Madam Chair. Related to the issues
    that small businesses face are not monolithic, but rather they
    are unique to each business, which is why there is an inherent
    need to ensure that there is more diversity among regional
    managers. Increased diversity ultimately helps broaden the
    scope for small businesses that can be impacted by private and
    public investment.
        Ms. Mendoza, before asking my question, I can't help but
    recognize and put a point on your own personal experience of
    being moved to the basement, as you say, because of a pregnancy
    and, well, you said it wasn't illegal, it certainly was wrong.
    And it is the kind of thing, unfortunately, that women and
    people of color face. And I think, sadly, even more
    unfortunately, there are a lot of people who seem very
    satisfied with that state of affairs.
        Ms. Mendoza, statistics show that hiring more women and
    multicultural investment managers at a fund is one of the most
    successful strategies for increasing investments for
    underserved entrepreneurs and small business owners. How can we
    help promote more diversity at investment funds and help our
    diverse small business owners?
        Ms. MENDOZA. So I think it is important to divide the
    conversation to, I want to be clear, we don't have a race-based
    investment thesis. We are an American-made company investing in
    America with a portfolio that looks like America.
        Mr. CONAWAY. Great.
        Ms. MENDOZA. And when you do that, you end up with diverse
    perspectives at the table, just as it is important to have the
    diverse perspectives that are in this room. I will use the
    Silicon Valley example of two guys from similar backgrounds, go
    to school together, get funded, and think they are going to
    crush it. And then the market lets them know that that is not
    the plan for them. And so usually what we see is that in a
    founding team, if the founders are able to bring in diverse
    perspectives sooner, the business has a faster path to success
    because they are able to get out of their own heads in a way
    that is very quantifiable and meet the product and the market
    where they meet.
        Mr. CONAWAY. Moving on to another issue in this area which
    I find very concerning. Community development and financial
    institutions in tandem with new market tax credits have made a
    massive impact in my home state of New Jersey. There have been
    a billion and a half new market tax credit investments in New
    Jersey and approaching $700 million worth of community
    development financing loans. These are critical programs that
    serve as a lifeline for small businesses in historically
    underserved communities by providing credit, capital, and other
    critical financing services available.
        Earlier this year, President Trump issued an executive
    order that aims to curtail the nonstatutory work of the CDFI
    fund. And last week the administration issued their initial
    fiscal year 2026 budget proposal that guts the program and
    turns it into a discretionary grant program. Very interesting
    to see who will be able to walk in the door and get those
    grants. The CDFI venture funds provides equity and debt to
    undercapitalized businesses around the country and made more
    than 55 million in investments in small businesses in 2023.
    Additionally, CDFI venture funds provide equity and debt and
    equity features to undercapitalized businesses around the
    country and made more than $55 million in investments in small
    businesses, as I mentioned.
        If you were going to broaden equity investments in our
    undercapitalized small businesses, isn't this administration's
    gutting of these important programs exactly what we ought not
    be doing?
        Ms. MENDOZA. I do agree with that.
        Mr. CONAWAY. I yield back.
        Chairwoman VAN DUYNE. Thank you very much.
        I now----
        Mr. CONAWAY. No. Oh, I don't. Sorry. I want her to answer
    the question. I will yield in a second.
        Chairwoman VAN DUYNE. Okay. I was like, you are staring at
    me. I am like, okay.
        Mr. CONAWAY. I was going to stop talking and let her
    finish.
        Chairwoman VAN DUYNE. Ms. Mendoza.
        Ms. MENDOZA. Speaking of the system, I will always mess up.
        Chairwoman VAN DUYNE. Do you want to go ahead and answer?
        Ms. MENDOZA. Yeah. I was just going to say I think Detroit
    is a great example of what a CDFI can do first for a city. You
    know, since the '80s and '90s they have been bringing Detroit
    back with very similar investments. And I think, honestly, the
    only failing I can think of with CDFIs is that we didn't put
    enough in, the need is greater than the capital. And I can't
    name a local small business owner that knows their local CDFI
    off the top of their head is that we need a PR campaign for
    them.
        Mr. CONAWAY. Great. And thank you. And now I yield back.
    Thank you, madam.
        Chairwoman VAN DUYNE. Excellent. Thank you.
        I now recognize Mr. Latimer from New York for 5 minutes.
        Mr. LATIMER. Thank you very much, Madam Chairman.
        There seems to be some misconception that by presence on
    the East Coast, perhaps it is true on the West Coast as well,
    that automatically funding will follow. And my experience in my
    area is that the same challenges exist market by market,
    depending on the business and depending on the location of it
    within that district or that market. So I would like to ask
    each of you one question, and I will start with Ms. Mendoza,
    but I would like each of you to address it. What do you see as
    the things that the SBA can do proactively to better promote
    the programs that would help these communities to make that
    connection as a government agency? What tools would help us
    better get that message out and reach the people that can best
    be benefited by these programs?
        Ms. Mendoza and then the other folks on the panel, I would
    appreciate that.
        Ms. MENDOZA. I think we are a great example of this. We are
    a successful venture capital firm built from scratch, and we
    haven't gotten a single grant from anyone because I don't have
    time to read the website and figure it out and apply for it
    when I can be potentially closing an investor. And so the one
    tool that you can do is meet the market where it is and lower
    barriers at every possible entry so that these small business
    owners who are already taxed for time and resources, it is very
    clear to them what is available to them and how they apply for
    it.
        Ms. FIELDS. Yes. Thank you for that question. I think for
    us as a small business owner, we often don't have time or are
    unaware of what opportunities are even out there for us. We are
    simply too busy just trying to run the day-to-day of the
    business. I think for me being locally in Oklahoma, I sit on
    the board of the Oklahoma Manufacturing Alliance, which is an
    MEP, and they have been instrumental in helping us understand
    what is even out there to support us for a small business. For
    them to come into our business and understand what happens for
    us on the local level, what we need on a local level, and what
    is available to us has been instrumental in us being able to
    take advantage of these types of things.
        Mr. BASTABLE. I think the first is to educate and make sure
    people understand what programs are available. But I think the
    biggest impact would be simplification. I think we have taken
    something that should be relatively simple and we have made it
    very complex. We have made it arduous, time-consuming, and I
    think a lot of people just drop out of the process because of
    the complexity associated with it.
        Mr. LATIMER. Thank you very much for your answers.
        Madam Chair, I return the time.
        Chairwoman VAN DUYNE. Thank you.
        I now recognize Ms. Goodlander from New Hampshire for 5
    minutes.
        Ms. GOODLANDER. Thank you, Madam Chair. And thank you to
    our witnesses for being here today and for your testimony.
        I appreciate the positive examples that have been lifted up
    today. I came to Congress having served in the antitrust
    division at the Department of Justice. So I gave a great deal
    of time to really try and understand how private equity and
    venture capital firms are operating in really important
    industries across our economy, increasingly consolidated
    industries across our economy. I spent a lot of time thinking
    about our housing markets and our healthcare industry. And, you
    know, as I have been on the job now for about 150 days and as I
    have traveled around my state in New Hampshire, the concerns
    that I was looking at at the Justice Department, I am seeing
    them play out in practice on the ground. The role that private
    equity firms have played in the nursing home industry in
    rolling up mental healthcare providers across the country, the
    concerns are real.
        And I wanted to, at the outset, enter two articles into the
    record today. One is an op-ed written by one of my constituents
    from Nashua, New Hampshire, Melbourne Moran. He writes about
    the critical role of small businesses in mental healthcare. And
    his small business, Wanderlust Therapeutic Services, plays a
    really important role in my hometown Nashua in ensuring mental
    healthcare access. He says that local health practices like his
    aren't branches of large corporations. ``They are local mom-
    and-pop counseling shops, owned and operated by licensed
    clinicians who live and work right alongside their clients.
    These professionals aren't answering to shareholders or
    national franchise boards. They are not corporate entities.
    They are answering to the needs of their neighbors.'' And I
    think he is absolutely right.
        I also wanted to enter into the record a piece from one of
    my former colleagues at the Justice Department, Brendan Ballou.
    He points to--it is a New York Times piece entitled ``Private
    Equity is Gutting America and Getting Away with It.'' He points
    out at the outset that according to the nonpartisan National
    Bureau of Economic Research, private equity ownership just in
    the nursing home industry alone is responsible for 20,000
    premature deaths over a 12-year period.
        So I wanted to enter these articles into the record and
    ask, beginning with you, Ms. Mendoza, if you could comment on
    what you have observed in the role that private equity and
    venture capital firms have played in industries, including in
    our healthcare industry and our housing industry, and do you
    see any problems?
        Ms. MENDOZA. In my opening remarks, I quoted Eric Ries from
    Lean Startup, and his entire concept is that you need a
    feedback loop. You need to release a product into market, talk
    to the market, and come back. I see the same problem in private
    equity that I see with us rolling out programs recently is that
    that feedback loop is broken and we are not listening to the
    customers that are consuming it and coming back to them. So I
    think anytime that you blitzscale an industry without a
    feedback loop, and we have a history of that in the United
    States, you end up with these issues.
        But I do want to be careful that not all private equity
    firms are created equal. I also use the example of, you know,
    we have 55 million under management, A16Z is in the billions.
    And so I think it is a different--when you are legislating this
    entire industry, it is a lot like trying to legislate
    agriculture. You know, there are small organic farmers. There
    are also huge food factories, and you can't put them all in the
    same bucket.
        Ms. GOODLANDER. I understand that. A follow-up question is
    as a general matter, as a general principle, do you agree that
    firms should be sued and be held accountable, should be able to
    be sued and held accountable, for any wrongs that are committed
    by companies in their ownership and control?
        Ms. MENDOZA. So if the private equity firm has a
    controlling interest in that company, they would be voting
    board members and they should be held accountable in that role
    for that.
        Ms. GOODLANDER. Would our other witnesses like to comment
    on that question or?
        Mr. BASTABLE. No, but are you referring to the first
    question you asked about consolidation?
        Ms. GOODLANDER. No, I am asking do you think as a general
    principle that firms should be able to be held accountable,
    should be suable for wrongs committed by companies that they
    effectively control?
        Mr. BASTABLE. I mean, I think it is a nuanced question
    depending on what is actually happening. And as you mentioned,
    you know, there are different situations in different sized
    businesses and different parts of the capital stack where
    private equity is involved, where they may be a lender and they
    may have board observation rights, or they might be a minority
    investor. And so it is a broad, you know, topic.
        Ms. GOODLANDER. Sure. I think, though, that this
    cornerstone principle of accountability is part of what we need
    in this country to restore faith in private equity firms across
    our country when so many communities have felt the pain of an
    unaccountable entity gobbling up some of the most important
    institutions in the life of our community.
        So I thank you and I yield back.
        Chairwoman VAN DUYNE. Thank you very much.
        I now recognize Mr. Bresnahan from Pennsylvania for 5
    minutes.
        Mr. BRESNAHAN. Thank you, Madam Chair, for convening this
    important hearing. And thank you to our witnesses for being
    here today.
        I have always been a strong advocate for expanding
    opportunities for our entrepreneurs and small businesses to
    start, grow, and thrive. For some, the right path may be
    working with the local community bank, securing an SBA loan, or
    receiving a government grant. For others, private equity can
    serve as a powerful engine fueling innovation, expansion, and
    ultimately a chance to achieve the American Dream. When done
    right, these partnerships can help small businesses grow in
    ways that benefit all of us, creating good, high-paying, and
    meaningful jobs for hardworking Americans.
        Ms. Fields, your work in the manufacturing sector,
    especially relevant to Pennsylvania's Eighth Congressional
    District, where manufacturing plays a vital role to our local
    economy, I want to revisit a particularly compelling part of
    your testimony that deserves to be underscored in this
    conversation. You shared that thanks to your partnership with
    private equity, your company is now in a position to onshore
    more of its manufacturing operations and plans to grow your
    workforce by over 30 percent in the next 18 months. That kind
    of investment in American jobs and communities is exactly the
    type of success stories we should be recognizing and supporting
    here in Congress.
        With that, Ms. Fields, I will turn to you for my first
    question. You mentioned onshoring your manufacturing
    operations. Could you expand on why they are such a priority
    for your business and what specific challenges you are
    encountering in doing so?
        Ms. FIELDS. Yes. We always want to be an American
    manufacturer first and the only reason that we do not
    manufacture something in America is simply because we cannot
    compete with what it costs us to produce it here versus what it
    would cost us to produce it overseas. And so, we do presently
    manufacture some products overseas.
        By having private equity come alongside us and the things I
    had previously mentioned about allowing us to figure out how to
    get cost out of our operation, become far more efficient, and
    to understand how to better run a more efficient facility, it
    allows us to look at products that were previously unattainable
    to us to manufacture domestically. Now we can bring those back.
    Obviously, the potential tariffs out there also allow us to
    look at that even harder today. And so we can now confidently
    make those needed investments to expand our product line and
    bring those products back, knowing that we can produce them
    here and compete with other larger companies.
        Mr. BRESNAHAN. What challenges are you experiencing on the
    workforce development side?
        Ms. FIELDS. Our biggest challenge is access to workforce.
    So a question for us is being able to bring people in to do
    manufacturing. It is sometimes hard to find people, so we
    partner with local trade schools to get those people.
        Additionally it is hard getting people to stay. Once they
    join us, we get them trained, and getting them to stay so we
    have to be competitive in terms of pay, benefits and a pleasant
    work environment.
        Mr. BRESNAHAN. Well, I appreciate that. Now, regarding the
    partnership with private equity, did you look for similarities,
    similar overlapping business practices, or what was the--if you
    can point to the single most beneficial part of the
    relationship and partnership, what would that have been?
        Ms. FIELDS. I think for us, obviously, capital is part of
    it, but for us it is having expertise brought into our
    business. Our private equity firm, as I mentioned, is actually
    Mr. Bastable's firm that we are partnered with and they focus
    on manufacturing in the lower middle market, which is exactly
    in the pocket for us. They have people on their team that have
    expertise that we simply did not have access to or could not
    afford to have access to. The partnership, the relationship,
    the expertise and the support that they bring is critical to
    us.
        Mr. BRESNAHAN. I appreciate that.
        Mr. Bastable, I will pivot to you. Right now we are looking
    at relatively high interest rates, around 7 percent, which
    makes it difficult for businesses to justify new investments.
    In that context, can you elaborate on how private capital can
    serve as a critical tool to help businesses invest, scale, and
    create jobs in the United States?
        Mr. BASTABLE. Yeah, it is a great question. And so as
    interest rates increase, it becomes more costly for them to
    take on debt, to invest in equipment, and so on and so forth.
    And, you know, when you have a private equity partner who has
    access to capital or equity, they can invest in those
    opportunities and so they don't have to make interest payments
    every time they make an investment into their business.
        Mr. BRESNAHAN. Do you traditionally charge like a
    management expense back to the company that you are partnered
    with?
        Mr. BASTABLE. Minimal.
        Mr. BRESNAHAN. Okay. With that, I yield back. Thanks.
        Chairwoman VAN DUYNE. Thank you very much.
        Seeing no other questions, I want to thank our witnesses
    for their testimony today and for appearing before us.
        Without objection, Members have 5 legislative days to
    submit additional materials and written requests for the
    witnesses and to the Chair, which will be forwarded to the
    witnesses. And I ask the witnesses to please respond promptly.
        If there is no further business, without objection, the
    Committee is adjourned.
        [Whereupon, at 11:04 a.m., the Subcommittee was adjourned.]
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