One of the major problems with raising money from individuals, rather than institutional venture capital funds, relates not to these peoples' ability to make smart financial decisions, but relates to information asymmetries. When a Company is publicly-traded, a significant amount of financial information is disseminated to the public markets. Since public company businesses are relatively more stable, this historical financial information and guidance is sufficient to come to a reasonable valuation of the company (reasonable in the sense of being accurate to a factor of 2, rather than an order of magnitude like a VC deal).
When venture capitalists make an investment, they have face-to-face meetings with the entrepreneurs, and, critically, the ability to request follow on due diligence materials to their own satisfaction. If members of the general public are going to make venture capital investments, is it really reasonable for them to be able to meet the entrepreneurs face to face? ALL VCs will tell you this is of critical importance, although skeptical minds may disagree. Is it likely that companies will satisfy follow-on due diligence requests from a large number of individual investors? No, highly unlikely. Without these two critical factors, it will be difficult for individuals to realistically assess the risks and rewards of a particular company.
A second critical factor in a venture capital transaction is the negotiation between the VCs and the company. If the result of this legislation is that transactions are consummated without protections, such as liquidation preference, information rights, control provisions, that will not be a positive for the investing public. These terms are required if you are to have any hope of having good risk/reward tradeoffs.
In light of these concerns, I would think that the easiest way of protecting the public would be requiring that any particular investment round include at least a certain percentage coming from a qualified venture capital or private equity firm who would negotiate price and terms on behalf of the investors. Critically, the investing public and this person would have to get exactly the same economic deal, otherwise the whole thing breaks down. If they instead put this program in the casino and don't provide proper structure and incentives, it will be a wealth transfer just like the other casino games.
I would like to point out that I am all in favor of individuals having the opportunity to invest in these companies, in general, I just think that careful consideration needs to be given to how the market works "on the ground" in opening up any such market.