UPDATED: 6.39PM The Labour Party has unveiled a new policy aimed at young entrepreneurs.

The party is proposing to set up a scheme where successful candidates, aged 18 to 23, could access training, business mentoring, and up to $20,000 in capital.

Labour Leader Andrew Little said the changing nature of work is creating a new generation of smart, innovative young Kiwis who need nurturing and capital to get successful ideas off the ground.

He said encouraging their business skills will be crucial.

“We know that not everyone thrives in formal education or training and some of our best-known entrepreneurs learnt everything they know on the job," Mr Little said in the policy announcement at assembly of St Thomas of Canterbury College today.

In January, Labour announced its first major Future of Work policy, which included three years' free training and education across a person’s lifetime.

Labour said today’s announcement is an extension of that, allowing smart, young entrepreneurs to cash that in and capitalise on a great business idea.

It would come in the form of a one-off start-up grant with the safety net of funded business training, an ongoing business mentor and a business plan approved by an independent panel of experts.

The grants will be capped at 100 per year for the first three years.

Mr Little said there would be checks and balances to ensure grants are used properly.

"Part of the process is they have to develop a business plan. They need to have mentor with them. These mentors will come from trusted organisations. If anybody applies and gets money and misuses it that will be fraud, and we will deal with that in the usual way.

Economic Development Minister Steven Joyce said the policy is a bit random and he doesn't think Labour has any understanding of what is happening in this area.

"We already have a program that provides start up companies with up to actually $450,000 -- for technology start ups. We also have regional business partner programs that supply business support for small start ups for up to $10,000."

Mr Little said today’s young people "are growing up in an environment that promotes entrepreneurial thinking in ways older generations did not". 

"Their working careers are more likely to involve generating more of their own income and less stable work. Encouraging their business skills will be crucial.

“There are many barriers to young people accessing finance to back good business ideas. But this plan is about much more than just capital.

"Putting young Kiwis through business training, providing them with an experienced business mentor and requiring a thorough business plan to be successful for the grant provides a real safety net for their idea.

“This will offer real opportunities to young people who have a good business brain and the drive to make their ideas work so they can not only be a part of the Future of Work, but help determine the future of work."

“New Zealand needs more successful entrepreneurs and this small investment will help create the next generation of them," he added.