First, this kind of thing has been going on for decades. It has been going on in the US with the govt, particularly the military, funding research. 3i, a relatively large PE/VC investors in Europe, started out as a govt-funded body in the UK (there were parallel bodies to the ICFC...I can't remember what they were). Scottish Enterprise is a huge VC investor (they were an early-stage investor in FanDuel).
Second, the concerns that people have are due to issues that are solveable. Controlling how the govt makes appointments, only investing in companies with matched investment from the private sector, etc. It can work. It does work.
Third, the issue that this is meant to solve is the fact that capital markets don't work all that well everywhere. This was the case in the US, it was the case in the UK (and is still the case in the UK), and it may be the case here. Either way, it is a fine and logical solution. If you have experience at the coal face, it is often very evident that investors are not good at this kind of thing (the situation that exists in the US where individuals will fund startups is totally unique, it occurs nowhere else).