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This chapter explores the nancing of small and medium-sized businesses (SMEs) through venture capital. Problems of asymmetric information, risk assessment, and the appropriation of rents (from innovation) often lead to a sub-optimal allocation of funding for early start-up rms. To address this ‘nancing gap’,‘hybrid’venture capital schemes exist, whereby the state acts as a special limited partner and channels funds into capital constrained, but high potential, young enterprises through private sector venture capital rms. The chapter explores the e cacy of the Australian scheme through a comparative econometric study (1997–2009) of the performance of rms accessing funding from the scheme and those funded solely through private venture capital. It reveals signi cant support for the scheme, with Institute of International Finance (IIF) supported rms more likely to be startups in high technology-based sectors, and also more likely to access follow-on nance as their business grows.