Abstract: Guiding entrepreneurial firm innovation is an important dimension of venture capital governmental guiding fund to play the guiding role. This paper first proposes the hypotheses of incentive effects, cumulative effects, and hysteresis effects based on the market failure theory and resource based theory. Then, it matches the full listing obtained from technology-based firm Innfund website with enterprises listed on National Equities Exchange and Quotations by the year 2016. After that it screens out those which had been sponsored at least once by Innfund investment protection during 2008 to 2014. Using this panel data, the paper adopts fixed effect model and examines guiding funds’ influence on entrepreneurial innovation output. The result shows that firms subsidized by guiding fund have more innovative output than those didn’t get the fund, and the more the investment protection, the more enterprise innovation output. The article also finds that there is a positive U relationship between the firms innovation output and the accumulative guarantee period of the guiding fund and the threshold estimation shows threshold value is five years. The findings provide empirical evidence for policy implications to improve entrepreneurial firm innovation.