Under the background of innovation-driven development and cultivation of new productivity, the scale of government guiding funds has surged, but some investments have the problem of incremental inefficiency. How to identify the efficiency boundary of investment intensity has become a key issue to improve the efficiency of financial capital allocation and the efficiency of high-quality development of enterprises. Based on the data of China’s A-share listed companies from 2015 to 2023, this study systematically examines the impact of government guidance funds on the total factor productivity of enterprises from the perspective of investment intensity by using propensity score matching and multi-time point double difference method. The study found that: First, the investment of government guidance funds has a significant role in promoting the total factor productivity of enterprises as a whole. Second, the promotion effect is not linear, but shows a significant inverted U-shaped relationship with the increase of investment intensity: moderate investment can improve the total factor productivity of enterprises, but beyond a specific inflection point, it will lead to a weakening of the promotion effect and may even turn into inhibition. Thirdly, the mechanism analysis shows that this nonlinear relationship originates from the dynamic game between the marginal benefit of ‘resource empowerment’ and the marginal cost of ‘governance distortion’. When the investment intensity is low, the resource empowerment effect of alleviating financing constraints is dominant; with the increase of investment intensity, the governance distortion effect caused by multiple principal-agent problems gradually increases. By eroding organizational efficiency, asset operation efficiency and market capacity, the efficiency of enterprises is reduced, and its negative impact eventually exceeds the benefits of resource empowerment. Further analysis shows that the positive effect of the guiding fund is more significant and the effective investment range is wider when the fund level is higher, the regional marketization degree is higher, the government intervention degree is lower, the industry competition is more sufficient, and the investment is in the early, small and high-tech enterprises. This study provides theoretical basis and empirical evidence for optimizing the investment strategy of government guiding funds, identifying reasonable investment intensity interval and promoting high-quality development of enterprises.