I think Cuban is wrong. It's WORSE when ordinary investors are risking their money. Today, you've got angels and VCs that have risked their money. And this is money they don't need. Big deal if everything implodes, what do they lose? Simply their bets. Back in 2000s, a lot of ordinary people lost money they couldn't afford to lose.
What he seems to be implying is that there are investment funds that exist solely for private equity investments, i.e. investments in startups as "VC" money. If that's true, and it's true that stuff like pension funds are sinking money into these "Equity Crowd Funds," then we're in real big trouble.
Most venture capital funds return between almost nothing and nothing. Most venture capital companies are horrendous stewards of institutional money. You can look up the available data, it's ugly for everything outside the best of the best.
I fail to see how it's worse to take a 97% loss on the bottom 3/4+ of VC firms, as opposed to taking the same total loss on a spread of crowd equity funding investments.