States are increasinglyunwilling to rely on volatileglobal investment markets to spot local opportunities for growing newbusinesses, but instead are acting to directly invest themselves in technologyopportunities. As of2006, all but six states had state venture capital funds, putting $5.8 billionannually into in-state business ventures, accordingto the National Association Seed and Venture Funds (NASVF) . 
The great advantage ofsuch direct investment is that,instead of just raiding the state treasury to give away corporate welfare,states can use such venture funds to create a financial stake infirms. If these businesses are successful, they will return equity to thetaxpayers that can then be reinvested in additional firms. Such investmentsalso can cement those firms in a web of local relationships that encouragebroader spin-off effects for the local economy.
Stateventure funds come in a variety of forms, usually involving somecombination of state investments, university involvement and cooperation withprivate firms.
- The Maryland Venture Fund  (MVF) has been one of the largest venture funds, existing for ten years and investing over $48 million in more than 175 companies, usually at the startup phase when seed money was most crucial. The state has gotten back every dime it invested in the fund and it continues to invest in businesses with average salaries of $70,000.
- The Indiana Future Fund  pulled together money from university foundations, local bio life-sciences companies and state pension funds to support six venture capital firms in Indiana. Just the $20 million invested by the state so far has leveraged $73 million  in out-of-state funding for investments in local firms.
- Building on the model of a statewide venture fund created a few years ago, Ohio is now seeing a number of new funds: The NEO Venture Capital Fund  in Northeast Ohio was created as a partnership between a number of local philanthropies to help draw in local and state funds with the goal of providing $375 million in local venture investments. The Central Ohio Entrepreneurial Signature Program  (also known as Tech-Start), received an initial $15 million in funding from the state's Third Frontier Program, and has already leveraged additional funds from local governments and businesses to create a $22.5 million three-year initiative.
An emerging key source of venture capital for suchinvestments are state pension funds:
- Highlighting the gains from state pension investments, a new study  on the California Public Employees' Retirement System (CALPERS), the nation's largest pension fund, found the fund's in-state investments had fed an estimated $15.1 billion in in-state economic activity in 2006 and created 124,000 jobs, more jobs than the construction or motion picture industries.
- Washington State  now holds $1.4 billion in Washington-based investments, using the money to leverage additional capital from other sources to invest in the state.
- The New Jersey Division of Investment recently announced the New Jersey Directed Investment  Fund, which will join pension fund investment with private-equity partners to support New Jersey-based firms and companies willing to expand state operations.
- Florida recently enacted an economic stimulus plan for the state that redirects $1.95 billion of the state's pension fund  into direct investments in Florida's economy.
National Association of Seed and Venture Funds (NASVF) - Seedand Venture Capital: State Experiences and Options  and Highlightsof the 2006 State Venture Capital Program Study 
MarylandVenture Fund 
Indiana Future Fund 
William Greider - "The NewColossus " The Nation
CALPERS - CalPERS- An Economic Engine