By Amber Allott at Newstalk ZB

One of the country's most successful entrepreneurs is warning the Government against acting as venture capitalists, and bailing out struggling start-ups.

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The Covid-19 crisis has caused venture capital to dry up, and some new startups are looking to Government subsidies for support.

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Rocket Lab chief executive Peter Beck told Newstalk ZB's Andrew Dickens the Government shouldn't take up the role of the venture capital industry and isn't in the position to take risks.

"You have to let nature take its course in respects, because when you artificially inflate or create markets it never ends well."

Beck said instead, the Government should be looking at big investments like infrastructure.

"Take those longer term views, rather than short-term packages or solutions which may solve an immediate problem.

"This is where you need to be brave and bold, about how you can really build this country."

Rocket Lab, a space technology company and global leader in dedicated small satellite launch, has received almost $2.9 million in wage subsidies from the government for 412 staff.

A small business advocate says Beck is right, and the Government shouldn't continue to support doomed businesses.

Small Business Voice chief executive Max Whitehead said the Government shouldn't be providing support for businesses, only to delay their eventual and likely demise.

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"The resources are precious right now," Whitehead said.

"I know the Government is sprinkling it around like a lolly scramble, but it's going to be later on that people realise how broke this country is going to become."

Beck's warning comes after Labour MP Deborah Russell was forced to backtrack on her comments regarding small businesses' own responsibility for being in trouble in the pandemic.

Russell made headlines when she said businesses in trouble "after only a few weeks in a pretty bad situation" was a sign they did not have the necessary strength.

She told a select committee, "we are seeing a number of small businesses really struggling, after only a few weeks in a pretty bad situation, which must speak to the strength of those small businesses going into this lockdown".

"It worries that perhaps people went into small business without really understanding how you might build up a business or capitalise a business in the first place, so you have the ongoing strength to survive a setback."

Her comments were immediately criticised by Robertson and Prime Minister Jacinda Ardern who both publicly expressed their disagreement.

Speaking a few days later to Newstalk ZB's Heather du Plessis-Allan, Russell backtracked on her words and apologised to anyone hurt by her comments.