| I think you're conflating two kinds of sophistication here. Your comment suggests that by "sophistication", we all mean "understanding the offerings of companies", such as an AI expert knowing the nuts and bots of an AI company's products. I am not talking about that kind of sophistication. The kind I'm talking about is the kind that tells an investor "don't invest in just one startup, because for the math to work on startup investing, you've got to invest in 10 startups, each of which have a 1/10 chance of success", and then the kind of sophistication that (a) knows how to secure the dealflow to make that kind of investment strategy work and (b) still be OK if it doesn't. Virtually no retail investor has any experience executing that kind of strategy. In fact: most professional VCs can't either: the asset class as a whole has historically lost money, and is subsidized by asset allocation rules at the large financial funds that plow money into VC firms. Most startups fail; most of the good startups fail. I agree: if it's just $100, who cares? But that's not how retail investors approach the markets they're allowed to invest in now. Maybe the JOBS Act should have capped the amount people can invest per year. |
Platforms are also required by law to have educational material. And, annoyingly, investors have to fill out a small questionnaire about the risks of investing every single time they invest. So if you invest $100 in 10 companies you'll have to fill out a thing saying you know you could lose all your money and you should be diversifying, 10 times.
Plus, it's in our own economic interest to make it clear how and why diversification is important and that investors make smart decisions. Our whole business model depends on investors making a return since we charge carried interest (i.e. a percent of profits that investors make). This is standard practice for accredited crowdfunding and I expect it to carry over to the unaccredited world.