The idea of modeling government funds after venture capital has swirled, in various forms, around the Obama administration since back in the campaign days. Now comes the latest twist: The Obama administration has named a former VC, Jonathan Silver, to head up the Department of Energy’s highly competitive loan guarantee program and green car loan program, which have awarded hundreds of millions of dollars in direct loans and guarantees to venture-backed companies including Tesla Motors, Fisker Automotive and Solyndra.
Silver’s appointment to the role of executive director of the loan programs comes as part of an effort, the DOE says, to “strengthen and streamline” the agency’s operations. Having left the Washington, D.C.-based firm Core Capital Partners (where he was the managing general partner) last year, Silver will now oversee the application process, analysis and negotiation for loans and guarantees under the two programs, as well as staffing. According to a release from the DOE, he will also manage “the full range of the Department’s alternative energy investments.”
This week’s announcement comes two years after then-Senator Obama’s energy plan called for the government to invest in green technologies in a similar way to venture capital firms, by pooling a venture fund and doling out funding tranches (an idea criticized by New Energy Finance as showing a “certain naivete“). It also comes less than a year after New York Times columnist Thomas Friedman gave voice to the notion that the feds should provide capital to VCs themselves (a scheme soundly rejected by Benchmark Capital partner Bill Gurley).
Silver’s appointment, however, is hardly a case of D.C. turning to Silicon Valley for guidance. Silver is very much a man of the beltway. In addition to working in private investment (you can read more about his background here), he served as an adviser to the Secretaries of Commerce, Interior and Treasury during the Clinton administration, and as Forbes noted in a 2006 profile, Core Capital “counts its Washington expertise as a defining specialty,” although it doesn’t explicitly seek to invest in companies selling to the federal government. (The firm focuses on Series A and B rounds for alternative energy, advanced manufacturing, telecommunications and software companies.)
Silver told Forbes that Core would typically select as few as 8-10 investments from up to 4,000 pitches each year. For the popular and competitive programs he’s now overseeing, that experience searching for gems should come in handy.