The pound;34 million Knowledge Exploitation Fund was set up in 2001 after a study revealed that college and university staff lacked the skills needed to give their students business training.
Scholarships provide grants to former full-time students, with most of the recipients being from further education and the rest from universities.
Each college has "entrepreneurship champions" to encourage students to create businesses. Support includes a pound;144-a-week wage subsidy.
Some 208 firms have been supported so far, adding pound;3.4m to the value of the Welsh economy, according to research by CM International for the Welsh Assembly, which set up the scheme.
Most people who started with help from the fund said they would not have succeeded without it, the research shows.
The fund has had its embarrassing moments, one of which pushed the scheme into the national limelight. One firm funded by the scheme was the Blushing Buyer web company. The firm supplies condoms, fur-lined hand-cuffs, adult board games, edible underwear and sex aids. It also gives advice to people too embarrassed to talk to their doctors about persistent smelly feet.
A Welsh Assembly spokesman said: "This is about enterprise. It is not a seedy sex site - it sells products to shy people."
As well as providing scholarships, the fund pays for the entrepreneurship champions in colleges and universities to foster links between post-16 education and the business community.
The money comes from ELWa - the Welsh funding agency for post-16 education - and grants are made to people who left college or university less than three years before applying.
The report into the fund's progress says: "The programme is valued highly, with almost all indicating that they would recommend the programme to others thinking of starting a business.
Colleges welcomed the fund but warned that the constant monitoring and checking of entrepreneurship champions added to the already huge mountain of bureaucracy. ELWa has pledged to cut the red tape.