Venture Capital Action Team

Venture Capital Action Team was a short-lived public–private partnership convened in 2009 to address capital shortages for small and mid-sized businesses by mobilizing investment from private actors and federal agencies. The initiative sought to combine the resources of the U.S. Department of the Treasury, private venture capital firms, institutional investors such as Pension Benefit Guaranty Corporation counterparts, and policy actors from the White House and Congress to revive early-stage financing trends observed prior to the late-2000s financial crisis. It operated amid contemporaneous policy responses including the Troubled Asset Relief Program, the American Recovery and Reinvestment Act of 2009, and debates in the Senate and the House of Representatives over financial-sector reform.

History

The Venture Capital Action Team emerged during discussions between officials in the U.S. Department of the Treasury, advisors from the National Economic Council, and representatives of the Venture Capital industry following the 2007–2008 financial crisis. Policymakers referenced models from Small Business Administration programs, proposals in testimony before the House Committee on Financial Services, and comparative frameworks from the European Investment Bank and the Canadian Pension Plan Investment Board. The team’s formation paralleled initiatives like the Troubled Asset Relief Program and coordination with the Federal Reserve System's stabilization measures. Early meetings included executives from Sequoia Capital, Accel Partners, Kleiner Perkins, and institutional investors such as CalPERS and Harvard Management Company, alongside Treasury officials and staff from the White House Office of Management and Budget. Public statements and congressional hearings referenced the team’s mandate to design vehicles that could attract private co-investment while leveraging funds from instruments administered by the Department of the Treasury and the Small Business Investment Company network.

Structure and Membership

The Action Team was structured as an interagency and private-sector working group, featuring senior staff from the U.S. Department of the Treasury, counsel from the Office of the Comptroller of the Currency, and participation by state-level entities such as the New York State Common Retirement Fund. Private members included partners and principals from leading venture firms—figures associated with Benchmark Capital, Greylock Partners, NEA (New Enterprise Associates), and Bessemer Venture Partners—as well as representatives from university endowments like Yale University and Stanford University. Advisory input was solicited from influential entrepreneurs and investors including alumni of Google, Apple Inc., Intel Corporation, and Microsoft Corporation. The team coordinated with legal experts from firms active in securities and fund formation, and with analysts from think tanks such as the Brookings Institution and the Heritage Foundation. Decision-making followed a consensus model, with working groups focused on fund-of-funds design, regulatory constraints involving the Securities and Exchange Commission, and taxpayer-protection mechanisms informed by precedents at the Federal Deposit Insurance Corporation.

Objectives and Activities

Primary objectives included restoring liquidity to early-stage capital markets for technology-oriented and high-growth firms, designing public–private co-investment structures, and mitigating perceived market failures that limited financing to startups in the post-crisis period. Activities encompassed convening roundtables with entrepreneurs from Silicon Valley, venture partners from Boston-area firms, and representatives of industry associations like the National Venture Capital Association. The team evaluated leverage and loss-sharing mechanisms inspired by programs at the European Investment Fund and studied tax-advantaged structures deployed by state economic development agencies such as the California State Treasurer's offices. It drafted proposals to seed funds aligned with later initiatives like the Small Business Investment Company modernization efforts and coordinated outreach to institutional limited partners including TIAA-CREF and Vanguard. Technical workstreams produced term-sheet templates, risk-sharing protocols, and recommendations to the Securities and Exchange Commission and to congressional committees overseeing financial services.

Notable Initiatives and Programs

Among outcomes attributed to the team were conceptual designs for fund-of-funds vehicles intended to leverage federal commitments with private capital, pilots that informed revisions to the Small Business Investment Company framework, and recommendations that influenced elements of the Investing in America's Future debates. The team’s proposals were cited in testimony before the Senate Committee on Banking, Housing, and Urban Affairs and were referenced during implementation discussions for programs administered by the Department of the Treasury and the Small Business Administration. Some private investors used templates and best practices circulated by the team to structure new funds, while state economic development agencies in places like California, Massachusetts, and New York adapted risk-sharing features from the team’s white papers. Collaboration with university endowments and pension funds informed later public–private partnerships that targeted innovation clusters associated with Boston, San Francisco, and the Research Triangle.

Impact and Criticism

Supporters argued the Action Team helped catalyze renewed coordination among federal actors, venture firms, and institutional investors, influencing policy reforms and contributing to capacity-building in the venture capital ecosystem. Critics, including commentators from the Cato Institute and some members of the Senate, contended that the proposals risked crowding out private capital, raised moral hazard concerns reminiscent of debates over the Troubled Asset Relief Program, and lacked sufficient safeguards against political influence in allocation decisions. Academic assessments from scholars affiliated with Harvard University, Stanford University, and the University of Chicago offered mixed evaluations: some praised the pragmatic design work on fund governance, while others warned about limited empirical evidence that public interventions would improve long-term innovation outcomes versus targeted tax incentives or regulatory reforms. The Action Team’s legacy persists in subsequent discussions about federal roles in fostering startup finance and in the institutional reforms adopted by agencies such as the Small Business Administration and the U.S. Department of the Treasury.

Category:Public–private partnerships