Startups as investments are very risky with long payoff horizons. With their limited funds, this is a poor investment for the average investor. I can't help but feel like this will hurt more people then it will help.
They're not great for institutional investors either: http://www.bloomberg.com/news/articles/2016-08-10/venture-ca...
With this kind of agreement, it's basically gambling since most info on start-ups is basically PR fluff. At least public companies have to publish annual reports and real investors get information rights.