The current capital market structure, with its high fees, delays, and limited access, is a direct result of regulations from the 1930s. These laws created layers of intermediaries to enforce trust, baking in complexity and rent-seeking by design. This historical context explains why the system is ripe for disruption by more efficient technologies.

Regulations like the 'Accredited Investor' rule, originally designed to shield small investors from risky ventures, are now perceived as gatekeeping. Retail investors argue these rules don't protect them but instead protect the elite's exclusive access to high-growth, wealth-generating opportunities.

By raising the cap for simplified venture funds from $10M to $50M and increasing the investor limit to 500, the INVEST Act lowers the barrier for industry experts to form their own micro-funds. This could spawn a new class of specialized VCs, such as syndicates of laid-off tech executives investing in their niche.

Despite the allure of direct-to-consumer models after the JOBS Act, the only viable path to retail capital in private markets is through financial advisors at wirehouses and broker-dealers. This channel requires products with liquidity and specific registrations, a fundamentally different approach than institutional fundraising.

The explosion in the number of solo GPs and small VC funds is not primarily fueled by institutions, but by a growing pool of individual and high-net-worth capital. This new LP base will demand fund structures with better liquidity and less administrative burden.

The SEC plans to overhaul the "accredited investor" definition, which currently limits private market access based on wealth. The goal is to introduce a knowledge-based standard, like a "driver's test," allowing sophisticated but less wealthy individuals (e.g., a finance professor) to participate in private investments.

The INVEST Act mandates a free test allowing non-accredited investors (95% of the US) to participate in venture capital. This shifts the barrier to entry from personal wealth to demonstrated financial knowledge, potentially unlocking a massive new pool of capital for startups from everyday professionals.

Wood calls current accredited investor laws, which restrict private market access based on wealth, "un-American." She argues it's illogical when anyone can buy lottery tickets. Her proposed solution is a simple knowledge-based test on diversification and asset classes to democratize access to venture-style investments for retail investors.

Well-intentioned regulations like Sarbanes-Oxley increased the burden of going public, causing companies to stay private longer. An unintended consequence is that the bulk of wealth creation now occurs in private markets, accessible only to accredited investors and excluding the general public.