Just a couple of weeks ago, I closed my first ever investment in a private Silicon Valley startup. I didn’t go through the standard procedures though: while I did conduct my due diligence, I did not get pitched face-to-face in a nice conference room, negotiate deal terms, or seal the deal with a firm handshake.

Instead, like many other educated folks who are excited about startups but don’t quite have the wealth to be accredited investors, I invested through a crowdfunding campaign.

There’s a storm of hype building around this new equity crowdfunding model, which allows middle and even working-class people to invest in a startup by the tens or even hundreds of thousands, without many of the onerous regulatory and accounting issues that so ...