These days, in the public mind the archetypal entrepreneur is the owner of a small high-tech company. In his chapter, Josh Lerner reviews the motivation behind governmental efforts to finance such firms. Lerner emphasizes the complex environment in which venture capitalists operate. Small high-tech firms are inherently risky. To make matters worse, there are severe information asymmetries—even when business plans are intensively scrutinized, it is difficult for investors to know for sure whether their money is being used sensibly. While various mechanisms exist to help venture capitalists deal with these problems, making the right decisions is very hard. As Lerner documents, they often pick losers.