Some of the points made in this article ring true with my experiences of NESTA around 2002-2004. At the time I was working on a Linux music software product and we had touted it around various Linux expos, as well as government and EU organisations trying to get some small funding and backing for our innovative and open platform ideas. In the end we released it as a product of our own back to some moderate success however the whole process - especially encouraging innovation in open technologies - I would have considered to be exactly the kind of thing that NESTA were set up to help more with.
As it was we met a lot of well-intentioned people but it really served only as a forum for some interesting ideas and lacked any feel other than that people were really rooting for you, good luck etc. All very British in some respects. However in my experience any state money ring fenced for innovation is incredibly hard for true innovators to get their hands on as usually they are just _too_ innovative. Innovation is wanted, but not too much of it.
One thing it NESTA failed to do was provide any structured approach to finding funding (either public or non). At a recent european conference I attended the EU were not only keen to tell you how much money was available but also to encourage and help you at least attempt to gain access to this funding. When NESTA was dequangod a few years ago I wasn't particularly sorry to see it go.