Although you may not have been implying it, saying the capital is being "lit on fire" makes it sound like the money vanishes into thin air, when that's not technically the outcome.

Even if the capital is given to/spent by a failing company, that money is at least still mostly spent on either materials or labor, which means it ends up back in the economy but somewhere else.

Obviously not the most efficient use of that capital if its being invested in poor companies, but it's not vanishing into thin air.