Honestly, I've been in a couple of startups (including one that got a lot of funding from VCs and going public) and I've never seen anything like the inefficiency that was normal in the public sector projects that I worked on.
Not that I'm against public funding of research - I'm absolutely not. But my experiences of public sector research funding on "large" projects completely put me off working in that sector (so much so that I left academia to co-found a start-up).
That was probably the single biggest issue, although there were others, there was a huge administrative overhead on all of the projects that it made it difficult to spot where any actual research was being done.
I've worked on publicly funded projects and in the private sector. The publicly funded projects were the worst for pointless reporting, accounting, and paperwork.
In the private sector, the boss pops his head in and asks what I've done to day and what I'll finish by the end of the week, and we adjust goals. It takes about 5 minutes a week to do this.
When I was working on a publicly funded project, there was a report to be filed every day that took an hour of my time to do, a report to be filed every week that took about three hours over the course of the week, meeting with management to make sure that the first two reports were complete, accurate, and not fudged which took an additional two hours a week, and an end of the month assessment for both spending and time clocked in that took about twelve hours over the course of a month.
I would speculate that you're probably more selective about the kinds of companies you work for than a VC is in funding them.
There have been some legendary turkeys over the last ten years, but for every pets.com or hairdryersbyemail.com there's dozens of others so misguided you never heard a thing, they just went nowhere fast.
Not that I'm against public funding of research - I'm absolutely not. But my experiences of public sector research funding on "large" projects completely put me off working in that sector (so much so that I left academia to co-found a start-up).