For the same reason Berkshire Hathaway isn't investing in your lemonade stand: they have billions to invest, so if you're only making hundreds of thousands on the best day, you're not worth the required effort.

An angel investor would want a diverse portfolio. A VC wouldn't. VCs make all of their money from the one startup that becomes a billion dollar company and lose or break even or make a little on the rest. So they're really only looking for huge swings with enormous returns.

If you're a seed stage VC you're where a larger fund has allocated a portion of its capital to play insanely high risk/high reward investments.

No, because people who give the money to the investor (limited partners) can optimize their own portfolios. It is not the VC's mandate to do that. From the LP's point of view, investment in the VC fund is the risky component of their portfolio.

I'm not sure there is such a thing as "low risk." Most small businesses fail even if their attempts at "disruption" begin and end with selling pizzas to the local college students.