B. There has been an increase, just not dramatic:
http://www.nvca.org/ffax.html

The table at the link does not track “angel” investments. Informal investigation indicates that it increased during 2003 for at least a few years (and still may be).

Thanks to the Enron overreaction, SARBOX has closed off going public for a large number of fast-growth companies that might have done so before it was around. If formal VCs don’t have a good exit strategy, they won’t invest, and more fundamental than that, they won’t raise the money. The only remaining exit is buyout by another company, which means you have to have something they want, which is a tougher bet.

Addendum: If cap gains tax receipts in 2002 (before the 2003 changes) were about $65 bil and the rate was 20%, that means there was $325 bil (65/.2) in reportable transactions (roughly, some people have a lower rate). With cap-gains receipts at $122 bil in 2007 and the rate at 15%, there was $813 bil (122/.15) in reportable transactions. That’s almost a half-trillion more $ that moved around to a different and better (on balance) use, instead of being locked in because the person didn’t want to pay the tax. It just happens that not as much as would be desired went in to VC, thanks to SARBOX.

Link (although the author doesn’t see what is totally obvious, and comes to the totally wrong conclusion):
http://time-blog.com/curious_capitalist/2008/01/do_capital_gains_tax_cuts_incr.html

In the tech world any more, a company hoping for a buyout exit is almost saying, “We hope Microsoft or Google will want us.” Not many can say that.

Why did the 2003 capital gains rate cut fail to trigger another spike in venture capital activity?