This is what Wefunder (YC W13) does with equity crowdfunding. It's great for companies that have passionate user bases. Even if the individual check size is small (e.g. min $100), it's a great for users who want to be part of something and great for companies who don't have to go to VC + can grow their user base.

The primary downside for startups is the cap table, but there's regulation in the works (already passed the House with near-unanimous bi-partisan support, waiting on the shutdown shitshow so the Senate can vote) to fix that.

Disclosure—I work at Wefunder, both on crowdfunding and very early cohorts (https://xx.team)