A single, large investor can sue, effectively, a corporation because they are on the same spending level. You need, roughly, a million dollars to sue a corporation.
A group of small investors have a VERY difficult time suing that same corporation. They have to be very unified, and, even then, it's very expensive. If the company is effectively burning up the money, it is very difficult to prove fraud and takes a very long time to do it. And your fighting your own investment which is paying the lawyers on the other side.
So, if you've invested, say, $50K, the company can basically run away with it and there is almost nothing cost-effective you can do. Even if you win, the company can go bankrupt--so your lawyer won't take things on contingency. Maybe you can interest the government in a securities or tax fraud case, but don't hold your breath.
Look at the problems with Kickstarter and the lack of ability to get your money back when things are, quite obvious, malfeasance. Those same problems hold until you start talking individual investments of almost 500K+.
Even worse, hucksters are VERY good at rooking people intentionally. I went through a case where a small group of us were showing the red flags all over the place (no financial statements, no board meetings, on, and on, etc.), and people still sided with the huckster.
The vast majority of people are dumber than you think.
States routinely run opportunities/scams that target the "lay population". Why don't these regulations address actual harm, rather than hypothetical harm?
But that aside: do you honestly think that the opportunity to invest in small "private" companies is likely to make non-rich people rich? I don't think so. Angel investing is a notorious trap for flush cashed-out startup people, because it's hard to make angel portfolios work. And those are people with relatively huge financial resources to draw on!
Normal people have many more liabilities than just lack of accreditation in competing with rich people in venture capital.
In a sense, money is just a technology a society uses for allocating its resources. So, yes, the society/government can regulate how you can spend your money as a little monkey-patch on its tech.
Despite how much you dislike it, it seems that the government can in fact decide what you do with your money. For example, hiring an assassin is illegal. I'm sure we'd all agree that banning conspiracy to murder is not a violation of your rights. Thus your "freedom" to spend your money according to your wishes is limited by the safety of other citizens, with as loose a definition for "safety" as we like.
Nobody here believes you should "know your place", but the more you learn about the world and business, the more you see just how hard this shit really is.
The downvotes aren't out of classism, but because your posts are not constructive to the discussion. They articulate a philosophical viewpoint and offer no real information of the sort I described earlier.
HN is not your soapbox.
"non-rich" people could be interested in contributing money to endeavors they deem worthwhile. Current rules prevent most from contributing to such endeavors, however.
The accredited investor standard doesn't prevent you from losing money.
It prevents people from marketing investment products to you.
Even if you're unaccredited, you can still invest in private company stock: it's just legally risky for the company that sells it to you, since the law makes it very easy for you to sue them.
The reason the accredited investor standard has teeth for startups is that if you're taking money from unaccredited investors, you're almost always taking it in small amounts from lots of people. The law assumes --- reasonably! --- that if you're doing that, you're marketing your stock as an investment product. That makes you, in effect, a public company, and you have to follow all the same rules as other public companies do.
I too have always been a bit miffed about the whole accredited investor thing, but that angle had never crossed my mind.