Green tech (Christopher Serra / For The Times / September 18, 2009) |
"In the end, every single technology has to compete unsubsidized in the marketplace against fossil fuels," said Khosla, rail-thin and dressed head to toe in black during an interview at his Sand Hill office.
For Khosla, green tech is not so much changing the nature of Silicon Valley venture investing as it is about taking it back to the future. Before such investing became more of a financial business, venture capitalists in the 1980s understood technology and took technical risks, similar to what is happening now with clean technology, he said.
"It's not like you have another clever idea and you do a Web application," Khosla said. "It's about fundamental breakthroughs, and that's physics, chemistry and biology, the hard stuff."
For instance, Khosla is backing Calera, which was founded by a Stanford University professor to create "green" cement by combining carbon dioxide emissions from power plants with seawater. Another Khosla-backed company, Amyris, was started by UC Berkeley researchers.
"When I met them they were working on malaria drugs," he said of Amyris' founders. "Six months later the same genetically engineered bugs were producing diesel."
Khosla also dismisses the notion that green-tech start-ups need hundreds of millions of dollars in venture capital. Although that may be true for companies developing large-scale renewable energy projects, most green-tech ventures require no more capital than a typical chip start-up, he said.
"What's different is the amount of technical expertise needed, which many venture capitalists are just not equipped to do," Khosla said. "It's about being more patient and looking for larger breakthroughs rather than rushing things to market."
Forging alliances
Idealab founder Bill Gross has sat on both sides of the venture table and knows the virtues of patience -- solar companies that he started in 2001 are just now bringing products to market. Although it's not a venture capital firm, Pasadena-based Idealab invests in green-tech start-ups. Gross is also chief executive of solar power plant builder eSolar and the founder of Energy Innovations, funded by Mohr Davidow Ventures.
"Putting metal in the ground is a completely different thing than putting bytes on the server," he said. "In the old days you could start an Internet company and go public 15 months later. With a clean-tech company, 15 months later you're still working on a prototype."
Venture capitalists have often forged alliances with mainstream corporations to help their start-ups, but the trend has accelerated as green-tech firms try to break into multi-trillion-dollar markets. BrightSource Energy, for instance, counts among its investors not only Google and VantagePoint but oil giants including Chevron Corp., BP and Norway's Statoil Hydro.
BrightSource in August struck a deal with Chevron to build a solar power plant to generate steam that will be injected into an oil field in Coalinga, Calif., to enhance petroleum production. And this month BrightSource signed up global engineering and construction giant Bechtel Corp. as a contractor for its first big solar power plant as well as an investor in the project.
Such networks now need to be global, venture capitalists say. In the past, technology invented in Silicon Valley would first find a market in the U.S. and then spread to Europe and Asia. Thanks to years of government support for clean technologies in Europe and Asia, the most thriving markets and most formidable competitors are often found outside the U.S.
"Global markets are very, very important, and that requires a broader understanding of the competitive landscape," said Wu of Mohr Davidow Ventures. "In a lot of cases, we're seeing the technology innovation begin in the U.S. but the market starts somewhere else."
For Khosla, the changes wrought by the green wave are just the latest cycle in Silicon Valley's never-ending reinvention of itself. That venture capitalists now have the opportunity to help save the world from climate change only increases the return on investment.
"That's not to say we're do-gooders, but it's nice to work on things your kids are proud of," he said. "And I have a lot of fun at it, going up against the conventional wisdom."
For Khosla, green tech is not so much changing the nature of Silicon Valley venture investing as it is about taking it back to the future. Before such investing became more of a financial business, venture capitalists in the 1980s understood technology and took technical risks, similar to what is happening now with clean technology, he said.
"It's not like you have another clever idea and you do a Web application," Khosla said. "It's about fundamental breakthroughs, and that's physics, chemistry and biology, the hard stuff."
For instance, Khosla is backing Calera, which was founded by a Stanford University professor to create "green" cement by combining carbon dioxide emissions from power plants with seawater. Another Khosla-backed company, Amyris, was started by UC Berkeley researchers.
"When I met them they were working on malaria drugs," he said of Amyris' founders. "Six months later the same genetically engineered bugs were producing diesel."
Khosla also dismisses the notion that green-tech start-ups need hundreds of millions of dollars in venture capital. Although that may be true for companies developing large-scale renewable energy projects, most green-tech ventures require no more capital than a typical chip start-up, he said.
"What's different is the amount of technical expertise needed, which many venture capitalists are just not equipped to do," Khosla said. "It's about being more patient and looking for larger breakthroughs rather than rushing things to market."
Forging alliances
Idealab founder Bill Gross has sat on both sides of the venture table and knows the virtues of patience -- solar companies that he started in 2001 are just now bringing products to market. Although it's not a venture capital firm, Pasadena-based Idealab invests in green-tech start-ups. Gross is also chief executive of solar power plant builder eSolar and the founder of Energy Innovations, funded by Mohr Davidow Ventures.
"Putting metal in the ground is a completely different thing than putting bytes on the server," he said. "In the old days you could start an Internet company and go public 15 months later. With a clean-tech company, 15 months later you're still working on a prototype."
Venture capitalists have often forged alliances with mainstream corporations to help their start-ups, but the trend has accelerated as green-tech firms try to break into multi-trillion-dollar markets. BrightSource Energy, for instance, counts among its investors not only Google and VantagePoint but oil giants including Chevron Corp., BP and Norway's Statoil Hydro.
BrightSource in August struck a deal with Chevron to build a solar power plant to generate steam that will be injected into an oil field in Coalinga, Calif., to enhance petroleum production. And this month BrightSource signed up global engineering and construction giant Bechtel Corp. as a contractor for its first big solar power plant as well as an investor in the project.
Such networks now need to be global, venture capitalists say. In the past, technology invented in Silicon Valley would first find a market in the U.S. and then spread to Europe and Asia. Thanks to years of government support for clean technologies in Europe and Asia, the most thriving markets and most formidable competitors are often found outside the U.S.
"Global markets are very, very important, and that requires a broader understanding of the competitive landscape," said Wu of Mohr Davidow Ventures. "In a lot of cases, we're seeing the technology innovation begin in the U.S. but the market starts somewhere else."
For Khosla, the changes wrought by the green wave are just the latest cycle in Silicon Valley's never-ending reinvention of itself. That venture capitalists now have the opportunity to help save the world from climate change only increases the return on investment.
"That's not to say we're do-gooders, but it's nice to work on things your kids are proud of," he said. "And I have a lot of fun at it, going up against the conventional wisdom."
Copyright © 2009, The Los Angeles Times
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Peter DaSilva / For The Times / September 15, 2009 Vinod Khosla's firm, Khosla Ventures, said this month that it had raised $1.1 billion that would be largely devoted to investing in green-tech start-ups. |
Marianne Wu
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Peter DaSilva / For The Times / September 15, 2009 "In a lot of cases, we're seeing the technology innovation begin in the U.S. but the market starts somewhere else," says Marianne Wu, a partner at Mohr Davidow Ventures in Menlo Park, Calif
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