The downside is having X amount of shareholders you may not even know of over time. A decade down the line you may find yourself in difficult situations if you need to make some major changes. Especially with shares changing hands (e.g. inheritance).

I'd personally rather have few major shareholders on board who understand business and get it, than X amount random people all having their own ideas.

It does give more power to entrepreneur, as with more options you negotiate better investment deals.