Obama Did Not Tap a VC to Head the SBA; He Tapped a Private Equity/Buyout Specialist

More news out of Team Obama. Today he announced four new selections to his incoming team, including Republican Rep. Ray LaHood of Illinois for transportation secretary, California Rep. Hilda Solis for labor secretary, former Dallas Mayor Ron Kirk for U.S. trade representative and Karen Mills to head the Small Business Administration.

Reports have described Mills as a venture capitalist. But from what I can tell, this is inaccurate. Mills was a co-founder and managing director of Solera Capital, a small private equity shop based in New York.

The distinction is important. VCs take big risks by investing in new business. Private equity players take over or invest in mature companies and try to make them more efficient. Although both are considered part of the private equity industry, they play very different roles in the capital markets.

According to the LinkedIn database, “Solera Capital is a private equity investment firm, specializing in the consumer products, healthcare, Internet and technology sectors. The firm seeks to invest between $10 million and $30 million in equity per transaction. Solera Capital was founded in 1999 by Molly F. Ashby, Lori G. Koffman and Karen G. Mills and is headquartered in New York City.”

Mills, a Harvard MBA, also has worked as a director and in operating roles for other companies. According to the BusinessWeek Company Insight Center, before founding MMP Group, “Mills was the Managing Director and Chief Operating Officer of the Industrial Group for E.S. Jacobs and Co., from December 1983 to January 1993. Ms. Mills background includes … consulting for McKinsey and Co., and working as a Product Manager for General Foods. She has been a Director and Member of Audit and Compensation Committees of Arrow Electronics Inc. since 1994, and Director and Member of its Audit Committee of ArmorAll Products Inc. since 1994.

Ms. Mills serves as Director of Latina Media Ventures LLC, Triangle Pacific Corp. since 1988, Annie’s Homegrown Inc., Scotts Company, and Guardian Insurance Company. She served as a Director of Telex Communications Inc. and Baltimore Orioles.”

The more interesting question is whether or not Mills can turn the SBA into meaningful agency that actually has a significant and positive impact on American business. One obvious need is to get credit flowing again for small business.

Another goal may be to focus its mission more on small business. Here’s a link to the SBA’s strategic plan. Strangely, one of its mission goals is to “provide timely financial assistance to homeowners, renters, non-profit organizations and businesses affected by disaster.” Isn’t that what FEMA is supposed to do?


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