In the US we let people gamble; the government even runs and promotes it in many states. We let people get credit cards to buy consumable products and then pay 20%-30% interest. We let them take out loans to buy real estate worth multiples of their annual salary and have a debt overhang greater than they could ever save in a lifetime. We let teen-agers take out $100k of student loans that can't even be dismissed by bankruptcy. We are not "protecting" people in all these other problematic financial situations.

I might advocate for shutting down gambling, credit cards and getting the government out of student and home loans, but if we think those actions should be are allowed, investing in small companies should be also.