There's an entire industry of highly compensated people built around the idea that you can pick investment winners.
> so a more sensible approach might be to provide smaller investments to more people.
Banks have commercial lending departments that fill this function. Doesn't help with startup capital, but I doubt that is the limiting factor preventing most people from starting a successful business.
Just because someone pays you because you say you can pick winners, don't make it so. Top VCs like top Heege funds do get access to the best options - but the vast vast majority of those industries don't outperform index funds (after fees).
Plus even for the good ones, it's only the handful of major winners that compensate for their parlours ability to pick winners.
Bert Bachart was asked "what's the secret to a hit song" and he replied "If I knew that why would I write anything other than hit songs"
There is a world of difference between "I have an idea and if it goes wrong I have some good war stories" equity investment and "I have an idea and if it goes wrong I have a decade of debt to pay".
Really commercial lending departments are just part of the banks real roles of printing money and managing the temporal shifting of the liquidity illusion - ie helping existing businesses manage cashflow issues - startups is a tiny fraction of funding. yet startups is where the huge growth can only come from.