Government support for industries (even nascent ones) suffers the same problem. It can start out well and do a lot of good because the officials don't have vested interests over time the funding and regulatory structure will be captured by specific business interests. Once some fraction of the staff is captured, they will tend to bring in others of the same attitude with much more vigor than the non-captured, yielding negative stability. This is a key point - the objection to such programs is far more about what those programs will be in 10 or 20 years rather than their original form.
It could be that I'm misinterpreting the original post, but I just can't see what form beyond standard rule of law support that government intervention to create a "fertile breeding ground" for businesses could take. Clear, simple regulations and goverment transparency benefit small businesses more than large ones because large companies can afford the lawyers and institutional knowledge to deal with obscure regulations and smoke filled room politics. Small businesses can't spend the time or money to deal with such things. That's why big businesses frequently support additional regulation, accepting the cost as a reasonable price to pay to stifle any upstart competitors. The best substrate for business formation is a minimalist rule of law government.