Historically, to protect middle class people's retirement from swindlers and high-risk business deals, companies raising equity rounds are given the choice of t

Historically, to protect middle class people's retirement from swindlers and high-risk business deals, companies raising equity rounds are given the choice of three options: a) go public and accept the discipline of reporting requirements (which, the theory goes, de-risks the investments relative to private companies), b) raise money only from people one has a pre-existing social connection with (so called "friends and family" investment, which the government believes are less likely to be out-and-out scams and which would be difficult to sensibly prohibit anyway), or c) solicit investment actively, but only from sophisticated investors or investors who can afford sophisticated advisors. The vast majority of startups choose door #3, which requires that they raise from "accredited investors." There are a few ways to hit the sophistication bar; the most commonly invoked are an asset test (~$1 million in net worth exclusive of positive home equity) or an income test ($250k in income for 2 years with expectation of same in the future). This makes many normal people in the tech industry and in the professions (doctors, lawyers) into accredited investors, but excludes much of the middle class. Reasonable people can disagree on whether this is good policy, but it is more-or-less the law in the US. There are recently some exceptions due to the crowdfunding law, but they're as-of-yet outside of the startup mainstream. Accredited investors can't necessarily get into any particular deal; the most desirable companies quickly fill up, and since Snap was a fairly desirable company, the fact that an investor convinced their co-investors to sacrifice allocation in favor of getting a favored charity involved was basically a charitable donation all around. Accredited investors can generally find a company willing to take their money, but most investments in startups do not go well, even when the startups are executed competently. (This is the reason we have laws preventing e.g. 40 year old teachers from taking out a HELOC to put $100k into photo sharing for dogs.)