In India, but just as relevant across Africa. Praveen Chakravarty writing in Livemint: :
...This public venturing idea has been tried in various countries over many decades with limited success. One of the first such public ventures was the United States Small Business Investment Company (SBIC), started in 1958. SBIC drew criticism for its low financial returns and squandering of taxpayer money with the inevitable frauds and scams that accompany these programmes.More here
In India, where there is a thriving private venture capital industry that has kicked off an innovation industry already, direct government funding using taxpayer money in venture capital funds will likely be a reckless use of the public exchequer. The extreme risk-reward payoff matrix associated with venture capital funding of these businesses is ill-suited for governments to indulge in, using the taxpayers’ funds. At best, the state can provide indirect financing in terms of tax exemptions to start-ups domiciled in its territory.
Global experiences have proved that more often than not, these public venture programmes breed inefficiencies and frauds that outweigh any societal benefits. While there can be a case made for some light-touch role for government in labour markets and easing of business rules for the innovation economy, this temptation to be a financier of innovation must certainly be resisted.
