I think you are correct in predicting that retail investors will on net lose by investing in startups. In most cases, the best opportunities will go to the pros, leaving the amateurs to get the duds.
But, it does strike me that the Kickstarter model would be far superior if the backers got an equity stake in the company. As it works now, the backer takes a big risk in not getting a product, or getting a crappy product, yet enjoys no upside if the product is a smash hit.
It also strikes me that a barbell strategy to portfolios can be a good idea for some people. That is, invest 95-99% of your money in safe bets like Vanguard mutual funds, and then a few percent in high-risk, high-reward bets such as startups. It is unfortunate that worthy people who are not millionaires do not have the opportunity to do this. Even if people do not net make money from this, if people buy lottery tickets or go to casinos, why not allow them to risk money in a way that has potential to do good for society?
But, it does strike me that the Kickstarter model would be far superior if the backers got an equity stake in the company. As it works now, the backer takes a big risk in not getting a product, or getting a crappy product, yet enjoys no upside if the product is a smash hit.
It also strikes me that a barbell strategy to portfolios can be a good idea for some people. That is, invest 95-99% of your money in safe bets like Vanguard mutual funds, and then a few percent in high-risk, high-reward bets such as startups. It is unfortunate that worthy people who are not millionaires do not have the opportunity to do this. Even if people do not net make money from this, if people buy lottery tickets or go to casinos, why not allow them to risk money in a way that has potential to do good for society?