As the credit crunch eases for small businesses in general, the Treasury Department today turned its attention to the needs of startups, especially the high-growth companies that are responsible for most of America’s net new jobs.

The agency invited entrepreneurs, venture capitalists, and bankers to its headquarters next to the White House for a six-hour brainstorming session on access to capital. The conference, said Treasury Secretary Timothy Geithner, “is an opportunity to find solutions that run from the traditional—such as tax incentives and direct lending—to the innovative and alternative, such as creating a way to efficiently pool investments in small companies.”

“The financial crisis caused a great deal of damage to the capacity of innovators to access capital, and we can't promote innovation and investment in the United States unless we help these innovative companies get the funding they need to succeed,” Geithner said.

The Treasury Secretary, who moderated the day’s first panel, put the kibosh on some suggestions. For example, an executive of a small biotechnology company that has raised $7 million from angel investors suggested the federal government provide grants to match these types of investments.

“I could see why you’d want it,” Geithner said of grants. “It would be a challenge for us to do it on a meaningful scale.”

Forget “meaningful scale”—given the $1 trillion-plus budget deficit the federal government is projected to run for the foreseeable future, any new grants for businesses would probably be DOA on Capitol Hill. Innovators need money, but so does poor old Uncle Sam.

Geithner was also unenthusiastic about a suggestion that the government help venture capital firms mitigate the risk of investments in early-stage companies by taking equity positions.

There’s not much appetite in Washington these days for buying stakes in companies, not after the government just got through saving capitalism by investing billions of dollars in banks, insurance companies, and automobile manufacturers during the financial crisis.

That said, everyone agreed that startups face a tough time getting the money they need. Venture capital firms are investing a lot less money these days, and most of their investments are being made in only three states. Fewer companies are going public, meaning VCs are more likely to get a return on their investment through sales of companies instead of individual public offerings.

Helping the IPO market recover is a jobs issue, said Paul Deninger, senior managing director of Evercore Partners, an investment-banking firm headquartered in New York. Companies that remain independent create a lot more jobs than companies that are swallowed up by other companies, he said.

Seed and early-stage financing is “probably the most inefficient part of the capital markets,” said Duane McKnight, senior partner of Syncom, a venture capital firm based in Silver Spring, Maryland. A lot of promising businesses are missing out on funding because they’re not located where the venture capitalists are, he said.

Ann Miura-Ko, a partner at Floodgate, said her Palo Alto, California-based firm has invested in businesses in places like Pittsburgh and Indianapolis, but she said some innovative companies in places like these end up moving to Silicon Valley in order to find the talent they need.

There is “not enough engineering talent in places where we seed fund these companies,” she said.

The solution to that problem has nothing to do with financing; it has to do with our immigration policies. The government should change its visa policies so that engineers that are educated in the U.S. can stay here. A lot of those engineers would stay close to their alma maters, Miura-Ko said.