I'm not sure I understand some of the criticism I've seen of the Government's new FutureFund scheme for supporting tech companies.

Here's a quick thread of why I think it seems pretty well designed - am I missing something? (1) https://www.thetimes.co.uk/article/there-are-better-ways-to-spend-money-than-handing-state-bailouts-to-start-ups-c03nb97kc

Most high-growth tech startups are on a knife-edge journey. A 6-month delay to revenues can mean disaster even for a theoretically good startup. The commercial disruption of COVID-19 will surely cause many additional failures. (2)

There are two market failures in startup/VC finance:
a) Tech startups often create intangibles with spillovers. These are generally worth subisidising.
b) VC is v pro-cyclical - so when something macro goes wrong, investment falls by more than it "rationally" should (3)

The government's scheme provides emergency finance for tech firms - it will help them raise another round to deal with time-limited (inshallah!) disruptions caused by COVID-19
(4)

To the extent that the convertibility of the loans to equity is "punitive" (possibly an exaggeration, as @leoringer observes), that's probably a good thing, deterring firms that don't really need it and reducing unnecessary spending. (5)

Equally, the fact that you need private coinvestment would, you hope, put off firms that expert investors know have no chance, which gives the taxpayer some protection. (6)

So... the scheme seems pretty smart to me, especially given it was developed very quickly. Am I missing some fatal flaw? If so, pls say! (END)