A few results of their well-intended efforts:
1. Startups today have little or no realistic hope of gaining liquidity through an IPO, leaving them in a position where M&A is their only realistic exit, with the result being that valuations are lowered for founder exits (the consequence of Sarbanes-Oxley, among other new laws).
2. Startups today can't simply price their stock based on the reasonable business judgment of a board of directors, nor can they use a simple 10 to 1 ratio in pricing their preferred versus their common stock, but must instead incur significant expense in having to do independent outside appraisals just to take simple steps such as issuing stock options (the new 409A statute and accompanying regulations have brought this about).
3. The VC market has been all but dead for the past two years, owing in no small part to congressional actions that helped fuel the Fannie/Freddie subprime mess, leading to a financial meltdown.
4. Add to this the hammer that is about to fall on angel funding as reflected in the Dodd bill, and startups will not only have their VC funding sources largely dried up but will have far more restricted access to early-stage funding across the board. In practical terms, this will mean that funding activities will need to be based on: (a) having access to comparatively wealthy angel investors (maybe 25% of the current pool) while being prepared to incur significant delays in getting funds pending a minimum 4-month wait; or (b) relying on Section 4(2), which is the section of the 1933 Securities Act that offers an exemption from registration for private placements but without benefit of the safe-harbor approach of Regulation D and its rules relating to accredited investors (the equivalent of "walking on the high wire without a net").
Maybe any given point above is over-simplified or overstated but the broad pattern is clear. No individual item is ruinous but each contributes to costs and restricts options. It is not a good trend for startups.