This provides stable, consistent funding from a relatively unbiased source. Imagine investors got really hesitant and started pulling cash out; the tech industry would collapse.
Government grants are a long-running driver of innovation.
Plus, many areas of the country have limited access to capital. This helps alleviate that.
No, the tech industry wouldn't collapse. That's how it works for everyone already. The tiny, tiny number of SBIR grants isn't propping up the industry. And if your business sucks, they should pull the money out. This program is so small that it's not having any real positive impact. It's just a handout.
You're making a lot of random assertions with no basis in research at all. These programs weren't created on a whim. They've been created based on research that funding small businesses ultimately generates more value than the initial investment, which I rely more on your gut feeling (or wherever the fuck you're getting these ridiculous notions from).
Plus, many areas of the country have limited access to capital. This helps alleviate that.