Where someone argues not being repaid is worse than getting paid back early:
Tesla’s runaway success, by contrast, is demonstrating how making venture capital–style investments in risky companies—without demanding venture capital–style compensation in return—can end up costing taxpayers even more. In Silicon Valley, one Google pays for a dozen Pets.com. The government made the key mistake of loaning money to Tesla without insisting on receiving stock options, options that could have allowed the Department of Energy to pay for the Solyndra losses several times over.
[…] Today, the Energy Department defends the massive discount it offered as perfectly appropriate. “The loan program wasn’t intended to generate profit; the goal of the program is to provide affordable financing so that America’s entrepreneurs and innovators can build a strong, thriving and growing clean energy industry in the United States,” says a department spokeswoman.
Yet isn’t affordability the exact reason stock options are standard in normal venture capital deals? When a company is struggling, the options can’t be exercised and thus are perfectly affordable, not draining a dollar of cash from a startup company. Unlike a loan, stock options only cost the company money if it goes on to success—at which point it can afford to share that success with its early investors.
That’s not a mistake, that’s a feature. A venture capital firm has a responsibility to make money. The EPA has a responsibility to create a better energy future. This is not a revenue source for the government.Taxes are.
The deal may not have extracted the optimal profit, but it did help get an American automaker focused on energy efficient cars off the ground and that’s ok. That’s the EPA’s job.