Abstract
State venture capital programs, using public money to make high-risk equity investments in innovative firms in order to generate jobs, proliferated in the 1980s. A state by state follow-up survey of an earlier effort reveals that by the beginning of the 1990s, however, there was a shakeout in the ranks of these programs. Some lost political support; others could not be justified in economic hard times; still others could not operate effectively under the constraints of open, democratic government norms. Although the theory of state venture capitalism suggests that there is a continuing role for such programs, there are sufficient inherent contradictions to make their long-term survival a highly uncertain proposition.
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