Young companies of a certain size need access to capital markets to grow.

When they get it, they generate innovation, jobs and profit for their investors.

When they don't, all of those things suffer.

That's why Carlyle Group's Bob Grady is hoping that the overhaul of the U.S. financial system isn't a case of the cure being "worse than the disease."

Grady, who's among those who think that over-regulation has hurt the ability of small, growth companies to access the public stock market, says restoring the health of capital markets should be the biggest priority.

If it's not, venture capital firms and other investors will look increasingly overseas for opportunities for bigger returns.

Venture-capital backed companies have been an engine of job growth, accounting for 10 million U.S. jobs since 1970, according to the National Venture Capital Association.

"That's off a very small base of invested capital," says Grady.

He's been lobbying for the building blocks of competitiveness: more competitive capital  more spending on university research, K-12 education, and immigration reform that will allow more top talent into the U.S. by raising the number of H1-B visas granted annually.