Welcome back to Inc.’s 1 Smart Business Story! The U.S. government has always influenced business, but now it owns more shares than ever.

The federal government now owns stakes in 31 companies, according to a recent Cato Institute analysis. The Trump administration has embraced equity investments as a tool to boost domestic manufacturing, most notably by converting nearly $9 billion in CHIPS Act funding for Intel into a 10 percent ownership stake.

While the government has always interacted with business, either as protector or customer, becoming an active investor is new, Inc.’s senior staff writer Melissa Angell reported. Many in the financial world are split on the trend and questioning if the government should help pick winners in industries.

Some investors argue that government support of specific companies blurs the line between public policy and private markets. If Washington starts backing certain businesses, it could influence valuations, fundraising, and competitive dynamics in ways that have little to do with market performance. Others note that governments around the world, including China and several Gulf states, already use ownership stakes to advance national economic goals.

In this story you’ll discover:

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As the federal government takes stakes in private companies, supporters say it protects jobs and manufacturing. Critics worry it could reshape competition and influence which businesses thrive.

BY MELISSA ANGELL, SENIOR STAFF WRITER

The federal government is rounding out its portfolio as the Trump administration makes a habit of taking out equity stakes in private companies—a pattern that’s gaining traction, but not universal approval.

The federal government has taken some type of ownership in 31 companies, analysis from the Cato Institute shows, in a pattern that is gaining traction, though not approval from about half of the country. A late July poll from CNBC shows that nearly half of voters (49 percent) do not believe the government should be taking out positions within companies, compared to the 19 percent surveyed who were fine with the policy choice.

One mechanism that the government uses to take out these equity stakes is through federal funding. Look back to August 2025, when the administration inked a deal with Intel to convert the nearly $9 billion in funding Intel nabbed from the CHIPS and Science Act, a Biden-era law aimed at boosting domestic manufacturing, into a 10 percent equity stake. The Commerce Department has used this law as a funding vehicle for about a dozen other deals.

Which begs the question: If the federal government’s dealmaking is to maintain the momentum it garnered in the last year, what are the implications for the private sector? 

If you ask Dave McClure, an original member of the “PayPal Mafia” who is now the founder of Practical Venture Capital, he thinks a clear line should be drawn. If the government wants to fund research or provide grants to certain capital-intensive industries, he says that’s fine. But plucking out specific companies to support can hit slippery slope territory real fast. 

“I feel like we’re getting into territory that makes me a little bit nervous about how the U.S. has historically operated,” McClure says, later adding: “I might wonder if the Trump administration has other reasons than the benefit of the American citizenry at its heart.”

Much has been said about conflicts of interest within the Trump administration, ranging from the Trump family’s sprawling crypto business to the vast number of organizations numerous members of the cabinet remain associated with. Even in the context of Intel, the Trump administration has pushed other technology companies to work with, or invest in, Intel, including Nvidia.

Still, the government taking out equity stakes within direct companies isn’t new territory either. It’s happened several times during presidential administrations on both sides of the aisle. More recent memory shows this happening during the financial crisis, during which the government took stakes in the insurance company AIG and the carmakers General Motors plus Chrysler. The rationale here for intervening with these companies was simple: Without help from the government, either too many jobs would be lost, and the collapse of the institution could snowball into a greater financial problem. In the case of AIG specifically, its multibillion-dollar position in credit default swaps made it into one of the entities deemed too big to fail.

What’s different this time around, as John Deal, the managing director at Post Oak Group, points out, is the federal government’s reasoning on why it wants to take out these positions. Whereas before the government stepped in during a crisis, the Trump administration believes that taking out equity stakes is a new policy direction for the U.S.—especially with its focus on domestic manufacturing. 

“Frankly, it sounds more like a sovereign wealth model, like some of the European countries or Saudi Arabia,” Deal says. “So, it’s an interesting proposal, and it’s not entirely without precedent, but it’s important to understand that it is a wholly new concept in U.S. economics that will take us in different directions than historical examples.”

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