I do not really see why this means that "small investors are getting shut out of the most lucrative deals". One could phrase it as "small investors are not being exposed to the biggest risk". Mutual funds and managed investments make so much more sense for small time (mom and pop?) investors. Anything other than that, unless you a professional stock broker or finance expert, is just gambling.
How are you supposed to stop being small time if you can't take any amount of risk to get into the big time? Investing isn't "guaranteed free money", it's a calculated risk.
Should only the rich be allowed to take risks with their own money?
Our society is so bad at policing white collar crime that there's not a better option available. Unsophisticated "investors" will loose their shirts, their homes, and their retirement.
Oh, I forgot, if you take $100 from the government for food, you're a no-good leech, but if you take $100,000,000 from the government, you're a job creator and a pillar of the economy.
The rich don't get handouts when they fail, they get handouts the entire time they're succeeding. They pay 15% on capital gains while the rest of us pay 30% on income.
They'll pass a special tax cut for your one specific company. You can pay your workers the min wage, but not the living wage, and let everyone else (in the form of benefits) pick up the slack.
You can even get a handout for promising to create jobs or do stuff, and then never actually do it, or if you do 20% of it, blame the failure to deliver the complete promise on something hand-wavy.
Starting a company requires lots of money up-front, which poor people don't have anyways.
Investing in a high risk startup could theoretically be done for like $100 to buy .0001% if regulations encouraged this sort of thing.
It's the ease of access to things people don't understand and could lose all their money on that these regulations are meant to combat. I feel like your argument is very "assume spherical cow", but I take a more pragmatic "this is what would probably happen 99% of the time" approach to this.
Starting a company doesn't necessarily require a large amount of capital. Think self-employed people creating LLCs. Such single member companies are not at all uncommon and, just like with any type of business, most of them fail. So if your argument is that non-rich people should not be allowed to engage in financially risky behavior, surely self-employment is off the table too.
Small investors should absolutely be investing in index funds and not individual small-cap stocks. However, the returns of those index funds are driven by the returns of the index's constituent companies. When the most lucrative companies remain private, index funds can't invest in them, and that hurts all index investors.
Not to mention that even if the companies aren't any more lucrative, they can still help the average investor reduce their portfolio risk via diversification. If the universe of public stocks shrinks, your portfolio is going to face greater volatility, even if your absolute returns remain constant. Diversification is the only free lunch out there.
Towards the end of the article it gets into this. IPOs are mostly not a great deal for typical retail investors. Sure, there are some big winners but once a lot of those companies are in the public markets anyway, there are still a lot of opportunities for individual investors (for better or worse).
