The theory behind the law which requires this is that investing is very exceptionally risky and that non-sophisticated investors are likely to get taken advanta

The theory behind the law which requires this is that investing is very exceptionally risky and that non-sophisticated investors are likely to get taken advantage of. Therefore, dealing with them comes with a book of regulations which rivals that of major world religions. There is an escape clause for "accredited investors" : basically, if you are a professional money management institution or hit certain income/assets levels the government allows people to assume you know what you're doing. If you'd like to buy equity in a startup, I'd candidly advise against it, but the way forward is through a non-public transaction like the kind that happens in friends and family rounds. After professional money is involved most startups would be instructed to not take your money - the risks involved swamp the value of your marginal $1k.