The only downsides I see are from the venture capital perspective. I view microlending as being a form of investment that can actually work--that people will actually pump money into. I see this as an upside for microlending; however it's a bad thing for our economy and venture capital because it's an indication that we're lending to others, but not allowed to EASILY invest without being accredited.
I agree, but you're using this word "EASILY", and from what I can see it is basically "IMPOSSIBLE" for a startup to tap the pool of upper-middle-class professionals for investment capital, even though most startups and many professionals would be a good match for each other.
From my perspective, because usually I don't find many want-to-be angels who don't meet the qualifications and can supply the amount of funding I would be willing to deal with.
I'd rather deal with 3 people giving 200k than 30 people giving 20k. The downside of relaxing the accredited investor rule is the con artists will come out of the woodworks to get blind, senile grandma to invest in "amazing business opportunities". Personally, I think the rules are about right as they are. See above about LLC bypass if you really have a current need and can convince your non-accredited investors to go through the hassle.
See above, and then consider that if people could invest $500 in your startup, someone else could build a business creating a liquid market in startup equity, which you could then tap for funds in an arbitrary amount.
But I'd rather deal with loans than equity if the equity doesnt also give expertise. The type of quick equity fund you describe would likely have to offer convertible debt (ie lending) or force the risk of being crammed down regularly. And without the expertise, there is no downside for the entrepreneur to screw these $500 investors out of their money regularly.
So if you are already lending (convertible debt->equity) then how is this different from microlending?
Regardless, I see your point about flexibility, I just personally cant see it as all that much more useful than microlending for either side.
