The model for investing you describe still exists. However, we now call such high risk/high reward innovation-oriented investing venture capital. It could be that the distinction you are trying to make is one of scale -- small scale investors cannot provide enough VC to get most good ideas off the ground, and as such are restricted to investing in larger, lower risk enterprises. On the other hand, it seems to me that the main change over the past fifty years on this front is the distribution of potential capital, in that many more people now invest in the stock market on a per capita basis. From that observation, I would contend that the narrowing of risk profiles is a natural consequence.
Fortunately, the actual return induced by this behavior reflects the reduced risk. See, e.g., bear.warrington.ufl.edu/ritter/PBFJ2005.pdf.