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Posts Tagged ‘Vinod Khosla’

Article from GigaOm.

The notion that a lot of venture capitalists — and in particular Kleiner Perkins — have lost money on cleantech startups is now officially mainstream news, via a long article published in Reuters this week. The article isn’t inaccurate, but it misses a whole lot of nuances including  the big picture global trends of population growth and resource management, the long term play and some of the newer trends of the cleantech sector, and a few of the more successful companies in Kleiner’s cleantech portfolio.

We’ve been covering this roller coaster ride, and Kleiner’s plays for years. Back in the summer of 2010, I first wrote “Greentech investing: not working for most;” and in early 2012 I wrote pieces on “the perils of cleantech investing,” as well as “We can thank Moore’s Law for the cleantech VC bust.” Last year I wrote “Kleiner Perkins web woes, add greentech,” and Kleiner is not so great at investing in auto tech.

Cleantech Open western regional 2012

The article does have a pretty amazing tidbit in there, that Doerr dipped into his own pocket for the $2.5 million that Miasole needed to make payroll before it was sold to Hanergy. But here are 5 things I think the article missed:

1). The long-term larger risk, but bigger payoff: A lot of the manufacturing and infrastructure-based cleantech startups have been taking longer to mature and reach commercialization than their digital peers, and they’ve also needed more money. But when some of these rare companies actually do reach scale and are successful, they could be massive players with huge markets. It’s just a different kind of betting — think putting a $100 on 22 on the roulette wheel, versus $5 on a hand of poker. A combination of the two — a small amount of the high risk investments, with a larger amount of the low risk investments — could be a good play.

That was one of the reasons why it seems like investor Vinod Khosla is still investing in cleantech startups. Khosla Ventures’ biocrude portfolio company KiOR — which the firm mostly owns – has a potential market that is no less than an opportunity to displace oil in transportation. Imagine if a venture investor owned a big chunk of Exxon Mobil.

KiOR1

2). The bigger trend of population growth and resource management: Many venture capitalists might be steering away from the cleantech investing style of years prior, but the overall global trends that originally drove these early cleantech investments will only continue to grow. These planetary trends aren’t wrong, it’s just that a bunch of the investments that were made weren’t that smart. The world will have 9 billion people by 2050, and energy, water and food will have to be managed much more carefully. The climate is also changing, because too many people are using too many fossil fuel-based resources. Technologies — including IT — that manage these resources and replace them with more sustainable ones will have large markets, particularly in developing countries.WindGoogleLady

3). Beyond venture: For many cases, the cleantech investing model isn’t a fit for venture capital. But that doesn’t mean it’s not a good fit for other types of investors like private equity and project finance. Google has put a billion dollars into clean power projects, because those can deliver relatively safe and decent returns. Corporate investors — like GE or NRG Energy — are putting money into cleantech startups because it’s more than just a return, it’s a strategic investment. Cleantech innovation will also continue to come out of university and government labs and will be spurred along by government support of basic science research. Does cleantech innovation need a cleantech VC bubble to start changing the world?

 

4). Kleiner’s portfolio is more nuanced: The Reuters story accurately pointed out Kleiner’s struggling cleantech companies like Fisker, Miasole, Amonix, and others. And also rightly pointed out how the few cleantech companies it backed that went public — like Amyris and Enphase Energy — are now trading below their IPO prices. But the article didn’t mention the exit of solar thermal company Ausra, and also didn’t name some of the more successful and growing companies in Kleiner’s portfolio like Opower, Clean Power Finance, Enlighted, Nest, and RecycleBank. Opower is the energy software company to beat these days.

Honeywell & Opower's iPad smart thermostat app

Honeywell & Opower’s iPad smart thermostat app

5). Cleanweb: See a trend in Kleiner’s more successful and growing cleantech startups? They’re mostly software and digital based. The latest trend in cleantech VC investing is the so-called “clean web,” or using social, mobile, and software to management energy and other resources. Some of these companies are pretty interesting and inspiring, like crowd-funding solar site Solar Mosaic.

Finally, as a side note, it’s now in vogue to point out how cleantech investors have lost money. Many have. But I think investors that have paved the way for world-changing innovation, and taken large risks to do so, should in part be lauded.

 

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Article from TechCrunch.

Looks like the seed funding wave continues to get stronger. The latest evidence: Khosla Ventures, the Silicon Valley venture capital firm headed up by tech industry veteran Vinod Khosla, appears to be raising a new seed fund, according to regulatory documents filed with the Securities and Exchange Commission this afternoon.

According to the filing, the new fund is called “Khosla Ventures Seed B.” At the moment, details are very scarce: No money has been raised just yet, the filing says, and there is no maximum or minimum amount ascribed to the offering.

Khosla Ventures’ last seed-related fund raise was closed in January 2010, when the firm raised $300 million for a fund called “Khosla Ventures Seed.” This past fall, the firm raised $1 billion for its more general venture fund, Khosla Ventures IV.

Want to eventually get a piece of Khosla’s newest seed fund? Here’s what the firm’s website says it looks for in its earliest stage investments:

At the seed stage, what we’re really looking for is a crazy idea that may have a significantly non-zero chance of working. We want good teams. We don’t need complete teams or even complete plans, but the key technology risks of your approach—and the economic and market benefits if it is successful—need to be identified. From a seed perspective, planning for risk elimination at the lowest possible cost is the key variable we look for. Your seed plan should validate your hunches about the market and help you decide what market segment you want to enter.

We’ve reached out to the folks at Khosla Ventures for more details on the raise, and will report back with any additional information we receive.

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Here is an article from SF Gate.

“Vinod Khosla has been called a “green kingpin,” a fitting honorific given that the Silicon Valley venture capitalist controls $1.3 billion worth of funds targeted at all manner of clean tech enterprises.

Which makes his latest investment seemingly counterintuitive.

Last week, Khosla‘s firm, Khosla Ventures, partnering with Bill Gates, put $23.5 million into a suburban Detroit company looking to manufacture oil-dependent internal combustion engines.

Ah, but not just any oil-driven internal combustion engines. The 2-year-old EcoMotors International says its “opoc” (opposed pistons, opposed cylinders) engines are 50 percent more efficient and emission-reducing than conventional engines, are half their weight and size, with substantially fewer parts, and therefore much cheaper to produce.

Announcing the investment, Khosla called the company’s technology the kind of “game-changing innovation that can provide not only payback in months but also economic and carbon benefits to large segments of the world’s population without the need for subsidies or massive infrastructure investments.”

Gates sees the engine as “an important step in providing affordable, low-emission transportation for the developing world.” One of EcoMotors’ investors is Zhongding Holding (Group) Co. Ltd., a Chinese auto parts company.

“Maintech” solutions: Elaborating in an e-mail he sent me this week, Khosla said he believes EcoMotors’ engines “will prove to be the least expensive way to increase mpg – or decrease grams of carbon/mile driven – at zero cost compared with current engines. Basically, efficiency could be 2x what you get with a hybrid like the Prius.”

The Troy, Mich., company fits with Khosla’s oft-stated preference for “maintech” solutions, like more efficient engines, that don’t require the “massive investments” needed for the current flavor of the month, electric vehicles – which Khosla has said “are probably not material climate change solutions with technology developments that are visible today.”

It should be noted, however, that EcoMotors ( www.ecomotors.com) has also applied for a $200 million U.S. Department of Energy loan, which the company said it would use to build its engines at an old GM plant in nearby Livonia.

Based on testing so far, EcoMotors says its engine, designed by the former head of Volkswagen‘s powertrain division, will certainly exceed the federally mandated 35.5 mpg mandated standard for light vehicles by 2016. By that time – the company is aiming for 2012 – they should be in commercial production. The real goal: A five-passenger car getting 100 mpg, running on gasoline, diesel or ethanol.

Mainstream revolution?: Whether EcoMotors succeeds, Khosla’s investment illustrates a growing interest in what the company’s CEO, former GM senior executive Donald Runkle, has called “a revolution going on right now in propulsion systems.”

“It shows that Silicon Valley’s interest in the auto industry can’t just be married to the electric vehicle,” said Thilo Koslowski, chief auto industry analyst at research and consulting firm Gartner Inc. in San Jose.”

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Here is some not-so-exciting news from Businessinsider.

“The third quarter was rough for VCs, with 17 firms raising just $1.6 billion. That’s the fewest firms to raise money since 1994, and it’s the smallest amount of money raised since Q1 2003, says the NVCA and Thomson Reuters.

It’s an 81% drop from a year ago, and a second quarter of declines.

There were three big raises–Andreessen Horowitz with $58.5 million, Vinod Khosla’s fund raised $750 million, and Draper Fisher Jurvetson raised $196 million. Without those funds, it would be a nightmare.”

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Here is a good article from Portfolio.

After a couple of down quarters, venture capitalists are still optimistic about green companies. And one of the biggest, Vinod Khosla, has raised $1.1 billion to prove just how optimistic he is.

Vinod Khosla has bet big on green energy before, investing millions of his own dollars in companies experimenting with everything from biofuels to electrical efficiency.

Now he’s raised $1.1 billion from others for Khosla Ventures Seed Fund LP and Khosla Ventures Expansion Fund to make bets in the same space, a sign that the green economy is more than a passing fad. Khosla’s investment, the biggest amount raised for venture capital in two years, may also mark the return of large-scale financing in a sector that was battered by the economic meltdown.

Khosla, a Sun Microsystems co-founder who went on to a career as a venture capitalist at Kleiner Perkins before launching his own VC firm, certainly isn’t alone in the green space. Other venture capitalists see potential in clean technology that covers everything from inventing a smarter grid to turning algae into fuel and sunlight into electricity.

“I believe that we’re at the dawn of a transformation of a number of industries in the world that have not gone through a radical transformation,” says Alan Salzman, managing director at Vantage Point Ventures, another venture capital fund. “We have a number of daunting problems…combined with the ability from technology to provide the solutions. To be in on the ground floor…is going to generate staggering returns as the Ciscos and Googles of the world emerge.”

Salzman sees a day, not too far off, when cars are powered by electric motors, batteries store the electricity generated by the sun, and homes and offices are illuminated by energy-efficient LED bulbs, and the companies—like Better Place, Bright Source, and Tesla—that make all of that happen will be the new giants. It will happen, he says, because the science is there to make the changes, the recognition of global warming as a danger is growing, and new technologies ultimately will be cheaper.”

Read the full article here.

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