Founders of start-ups and the venture capitalists who finance them have two ways to get their money out of the company: sell it to another company or sell shares to the public.

The market for initial public offerings has dried up and companies are not being very acquisitive these days. In the first three months of 2009, only 56 companies were sold, half the number of a year ago, and none went public.

What do we need to do to make this happen? How can we make investing in private companies easier? 

First off, the accredited investor law is whacko – there has been a sudden loss of employment and salary cuts have occurred sharply. The government needs to take a look at this law and adjust it. The changing of this law will improve the small business (and local) communities.

The SEC should do a better job at policing bad/unethical companies…they should not prevent people from investment opportunities. Having the mindset of only letting “rich” people invest is un-American.

The American investor has been beat up by the stock market and small businesses are coughing up blood. America is a capitalist country – it is non-seneschal to not be able to invest in small companies.

There should be a way to better empower small businesses and to better the capital for small businesses.  By doing so, this could create a larger (local) community around such small businesses.

The way most are currently conducting business is not good – there is panic, fear, and lack of confidence.

I agree with this comment below.  User “NYCStartupfiend” left this comment on Fred Wilson’s blog.  He said this market is…:

Incredibly badly needed. Many entrepreneurs who have already built reasonably successful companies, but have not yet had any liquidity (read: money in their pocket) are likely to become better entrepreneurs after they sell some stock. With the “putting food on the table”, or more likely, putting the kids through college, risk gone, they be psychologically freed to think more boldly and clearly about their strategy. For the investors, employees, and the entrepreneur herself, that might well be one of the most critical levers in creating a massive return instead of a middling one. 

What are your thoughts?  How can we make this happen? What are current capital raising restrictions that exist which harm small business?  Please use the comments to discuss / brainstorm.