> Something traditionally considered "high risk", like investing millions of a billionaire's money in a start-up, might have low consequences for the direct investor. It sucks if the start-up fails, but they're still a billionaire, probably.

That's not so much about being a billionaire, but about diversification.

Fortunately, even people of very modest means have access to diversified index funds these days.

If you have a few thousand stocks in your index fund (eg like VWRA or VT), then in doesn't matter how risky any individual stock is (like the startup in your example), as long as holding them has positive expected value.