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A humbled Kleiner Perkins adjusts its strategy

Randall Smith (via AFR) | May 8, 2013
During the dot-com boom, Kleiner Perkins Caufield & Byers, the venture capital investment firm, all but minted money, making prescient early investments in Netscape Communications, Amazon.com and Google and delivering astonishing returns to investors. Along the way, it became a symbol of Silicon Valley.

Kleiner has invested in 88 clean-technology companies since 1999, more than any other venture firm, according to the Cleantech Group. They include the personal-transport device Segway, the fuel-cell developer Bloom Energy and the utility smart-grid provider Silver Spring Networks, which went public in March.

In funds raised in 2006, 2008 and 2010, green technology was one of three main strategies, under the aegis of the general partners Ray Lane and Bill Joy; who have since both become partners emeritus.

While still committed to clean technology, Kleiner has played down the sector and sought to make less expensive investments within it.

Some of the clean technology bets, like the Mascoma, a specialised ethanol startup, and Sundrop Fuels, a developer of biogasoline, require plants that cost hundreds of millions of dollars, according to Pavel Molchanov, a biofuels analyst at Raymond James. In March, Mascoma withdrew plans for a stock offering first filed in September 2011, citing market conditions.

 

GREEN TECHNOLOGY FLOPS

The green-technology portfolio has had its share of flops.

Think Global, a Norwegian electric-car company, failed in 2011. Kleiner's investment in MiaSole, a solar-panel producer, was wiped out when the company was sold to a Chinese clean-energy company at the end of last year. Plans have stalled for V-Vehicle, a plastic-car company later renamed Next Autoworks, which also had backing from Google Ventures and T. Boone Pickens.

Because Kleiner did not invest in earlier clean-technology blowups like Solyndra and Range Fuels, which also received government loans, Fisker presents a new level of public criticism. At the House hearing on April 24, Rep. Jim Jordan, R-Ohio, asked Fisker's founder and former executive chairman, Henrik Fisker, about Kleiner's ability to help obtain government loans.

Kleiner Perkins has helped raise "over $US2 million in political contributions in the 2008 election cycle, most of which went to Democrats including President Obama," Jordan said. He asked if that, or Doerr's role as an Obama adviser, helped Fisker "to get a loan, get taxpayer money from the Department of Energy?"

Fisker denied "any undue political favours or anything like that," and noted that it was Lane, not Doerr, who had served as Kleiner's representative on the Fisker board.

As it focused on green technology, Kleiner lost ground to some rivals like Accel Partners and Greylock Partners, which made early investments in Facebook, which Kleiner missed. The firm seemed to address the issue in late 2010 by hiring Mary Meeker, the former Morgan Stanley Internet analyst known as the "Queen of the Net" during the bubble.

Meeker has led a $US1 billion digital growth fund started in 2011 that has made about 25 later-stage bets including several hot social media startups, putting Kleiner in that game but at higher valuations.

 

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