Posts Tagged ‘Vinod Khosla’

A Bubble in Green Tech? VCs say “Not”

September 24, 2008

Venture capital investing in green technology is soaring. So you have to wonder: Is this the beginning of the next tech bubble?

So far, VCs say no, according to a survey by KPMG of 301 venture capitalists, corporate executives, entrepreneurs and bankers. VCs expect investment in the greentech sector to significantly increase in 2009. KPMG found that 91 percent of respondents indicated they expect venture capital activity in the greentech sector to continue rising in 2009, compared to only 76 percent who indicated the same the previous year.

When asked which sub-sectors of greentech would receive the most investment over the next two years, no one category dominated. Fifteen percent of respondents say energy storage (fuel cells, batteries, etc.) will see the most funding, followed by clean coal and wind with 14 percent each. Alternative fuels and solar rounded out the top five with 11 percent and 10 percent respectively. When asked what will become the dominant clean-air energy source in the next 20 years, 39 percent of venture capitalists say solar, 27 percent say nuclear and 18 percent say wind.

I don’t believe this is wishful thinking. The energy problem is huge and complex. And green tech investing only began to take off two years ago. What’s more, these investments will tend to take longer to pay off than your typical Web 2.0 Valley play. But at a certain point, say three to five years from now, VCs will want to start to see some pay-off from all this investment. Already, big-time green VC Vinod Khosla has pooh-poohed green technologies that don’t have the ability to scale economically to the point where they can effect billions of people.

“If it doesn’t scale, it doesn’t matter,” says Khosla. “Most of what we talk about today–hybrid, biodiesel, ethanol, solar photovoltaics, geothermal–I believe are irrelevant to the scale of the problem” of climate change.

Is Kleiner Perkins’s Apple-Focused iFund a Good Idea?

March 7, 2008

One of the most interesting things that came out of Apple’s announcement that it was entering the corporate wireless market was the news of the Kleiner Perkins iFund. According to the statement on KP’s Web site, “iFund is a $100M investment initiative that will fund market-changing ideas and products that extend the revolutionary new iPhone and iPod touch platform. . . Focus areas include location based services, social networking, mCommerce (including advertising and payments), communication, and entertainment.”

iFund is the latest example of an emerging trend in venture capital: platform-specific VC funds. By a large measure it is also the largest venture fund ever devoted to a single technology platform. In 2007, several funds were created exclusively to invest in Facebook applications. Last July, Silicon Valley VC fund Bay Partners caught some flack when it earmarked a few million dollars for investment in Facebook developers. In September, marquee firms The Founders Fund and Accel Partners (an investor in Facebook itself) launched a $10 million fund for Facebook applications called FBFund.

Kleiner Perkins is putting its top talent in charge of the fund. iFund will be managed by KPCB Partner Matt Murphy in collaboration with partners Chi-Hua Chien, John Doerr, Bill Joy, Randy Komisar, Ellen Pao and Ted Schlein.

So is it a good idea? Sure–especially if you are arguably the premier VC firm in the world. So far, platforms like Facebook have fueled an explosion in software development and wealth creation. The most popular Facebook applications, derisively referred to as widget makers, have created businesses that are valued in the hundreds of millions of dollars–and the business model for social networks and widgets is still in its infancy. Kleiner Perkins is betting that the iPhone represents a similar breakthrough in computing, and that it will be able to pick the winners of the market. With so much potentially at stake, that’s a bet worth taking.

One Kleiner Perkins alum has already set himself up to make a killing off of Facebook. Khosla Ventures, the firm started by Kleiner Perkins affiliated partner (and former General Partner) Vinod Khosla, has shown the foresight and brilliance to invest in two of Facebook’s blockbuster apps–Slide and iLike.

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