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Couldn't an equity crowdfunding investor spread their money around hundreds of companies as well, making smaller sub 1000 dollar bets. Or is there a minimum investment amount for this?

The main reason I'm skeptical of this approach is that I think the most promising companies won't do it, so the pool of companies doing equity crowdfunding will be low quality

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It's not clear whether companies will be willing to take hundreds or thousands of small investments. Each one adds a non-negligible amount of overhead in investor communications, and at a certain threshold of investors, you trigger the same regulatory requirements as if you were actually a public company (issuing quarterly and annual financials).

Are you just assuming an equity crowdfunding investor (retail investor) has the resources or sophistication to do proper due diligence on hundreds of investments?

Maybe the interest rates are lower on these for borrowers because the cost of due diligence isn't included. Not maybe, actually.

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