In the past few years states have become increasingly unwillingly torely on the chance that volatile global investment markets will chooseto invest in their local communities. Instead, states are choosing todirectly invest themselves in local emerging opportunities. The greatadvantage of direct investment, instead of simply raiding the statetreasury and giving away corporate welfare, is that by making directinvestment in local businesses, states create a financial stake infirms. If these businesses are successful, they will return equity tothe tax payers that can be reinvested in other projects.
According to the National Association of Seed and Venture Fund, as of 2006, all but six states had state venture capital funds.