I think the reality is that there are a lot of angels that will lose a lot of money on their investments. However, most of those angels are wealthy individuals

I think the reality is that there are a lot of angels that will lose a lot of money on their investments. However, most of those angels are wealthy individuals, and as a percentage of the total amount of investment capital across all of the various investment opportunities in the market, it's still a relatively small amount. Think of it like any other high-risk investment vehicle. For the crowdfunding equity part, I think that things like kickstarter are vastly more pernicious - there's even less due diligence than there potentially will be for crowdfunded equity. But also, if the amounts invested really are $5k, $5k investments are not going to bankrupt people. If we compare this versus the tech bubble in 2000, in that situation thousands of people lost their jobs, and many people who were playing the stock market lost a lot of money, regardless of whether they had liquidity or not. So I guess it depends on your definition of "worse". I suspect that it's "worse" for angel investors in that there are many more startups for them to lose money in, but definitely not nearly as bad for the overall pool of people who invest in companies.