LAGUNA NIGUEL, Calif.--Six years into green-tech venture investing, Kleiner Perkins continues to see the potential for green technologies to leapfrog incumbent energy systems, according to tech luminary Bill Joy.
In an onstage interview today at the Fortune Brainstorm Green conference here, Joy said Kleiner Perkins Caufield & Byers, where he is a partner, seeks out disruptive technologies that could change energy much the way that technologies, such as PCs and mobile devices, shook up the IT industry.
The famed Silicon Valley venture capital company, which funded Amazon, Google, and many other IT companies, has made about 60 green-tech investments, including in fuel-cell manufacturer Bloom Energy, smart-grid company Silver Spring Networks, and FloDesign Wind Turbines.
Joy said new technologies can offer a different cost reduction curve than incumbent products, he said. FloDesign Wind Turbines, for example, uses a jet engine-like construction, unlike traditional propeller-like wind turbines, giving it the potential to lower costs.
'We see disruptive opportunities for breakthrough technologies in renewable (energy) to take advantage of the hockey stick demand...from the market without subsidies," he said.
Joy said that Kleiner Perkins' strategy is to focus on technologies that take a long time to develop but offer disruptive potential. Or, it invests in start-ups addressing an unmet business need. Last year, it invested in Opower, which offers home energy efficiency recommendations through utilities.
As a venture capitalist, technologies that offer an incremental improvement over existing products are not worth pursuing because of the high capital cost of manufacturing energy-related products, he added.
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Joy said that distributed renewable energy, such as cheap solar photovoltaics, offer the opportunity to replace the existing centralized grid model. Storage is another vital technology which is why Kleiner Perkins has invested in battery companies, he added.
"These types of technologies were always possible. It's not some new nanoscience making it possible. It's just that people didn't focus on what the needs were and what was in the realm of what's possible," Joy said.
Because it is such a high-profile company, Kleiner Perkins' entry into green tech six years ago was seen as a validation of the entire investment segment. Many other venture capital companies, which traditionally worked in IT and life sciences, started making green-tech investments, leading to billions of dollars in venture capital in the segment.
But some investors say that enthusiasm among venture capitalists and private equity companies for green tech is cooling. In part, venture investors are seeking out mega deals in the Internet sector, in the hopes of replicating the rapid growth and high valuations of Facebook or Groupon.
Private investors and entrepreneurs have also come to better understand the difficulties of commercializing energy- and water-related technologies compared to IT. Often, energy technologies take lots of money and time to develop and energy regulations in the U.S. are inconsistent.
None of Kleiner Perkins' green-tech investments has been a financial home run yet and some of its bets have not paid off. A Boston area solar company where Joy was a seed investor called Solasta folded when it was unable to raise more money.