KiwiSaver providers have hit back at criticism from the country's biggest venture capital investor over their reluctance to invest in start-up Kiwi businesses saying it's too risky and expensive to put retail investors money into.

Movac chief executive Phil McCaw welcomed the government's Budget announcement of $300 million in venture capital funding but said the big challenge was building the confidence of other investors to allocate capital into the space.

"There is a massive issue with very lazy KiwiSaver managers."

He said KiwiSaver was broken in terms of investing into the sector.

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Despite investment in the sector being proven he

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