Green Tech

LOS ANGELES--Kleiner Perkins and Khosla Ventures-backed solar-thermal start-up Ausra is in talks with three potential buyers to sell itself, two sources familiar with the company told Reuters on Friday.

The buyers could take a majority stake or snag the whole company and the discussions are at a "very aggressive level," said one source familiar with the company, who was not authorized to discuss the matter publicly.

Both sources said the interested companies were global conglomerates in the power generation business but declined to name them. The companies already have various power products, such as steam and gas turbines, and are committed to renewable energy. One interested party has engaged with Ausra previously, one source said.

Ausra declined to comment.

A sale of the high-profile Silicon Valley start-up that has raised $130 million in venture capital would add to a string of recent deals and growing consolidation in the solar-power industry.

Chinese solar-wafer manufacturer ReneSola plans to buy Dynamic Green Energy while silicon maker MEMC Electronic Materials plans to acquire privately held SunEdison, which installs, maintains, and finances commercial solar systems.

Privately held Ausra, which is based in Mountain View, Calif., launched as a solar-thermal developer in 2006, when solar power and other clean technology were luring venture capitalists.

Two years ago the company landed a power purchasing agreement with California utility PG&E, a unit of PG&E Corp., for a 117-megawatt solar-thermal plant. Solar-thermal plants use the sun's rays to heat liquid to create steam, which drives turbines and generates electricity.

Earlier this year, the company switched tracks, saying it would move away from developing projects and focus on supplying large-scale solar steam generators.

This month Ausra said that it canceled its agreement with PG&E and sold the project's land to the largest U.S. solar-power company, First Solar, maker of thin-film solar cells.

Ausra also has deals in Jordan and Australia and other investors include Starfish Ventures and KERN Partners.

One source familiar with the company said that "extensive work" has been done at various stages of completion with the interested buyers.

"We're talking about meetings with dozens of people involved," said the person, who also was not authorized to speak publicly about the discussions.

Story Copyright (c) 2009 Reuters Limited. All rights reserved.

A panel considers whether cleaner tech boost the auto industry. From left, Center for Automotive Research CEO David Cole, venture investor Ray Lane, Ford Motor Chairman Bill Ford, and Michigan Governor Jennifer Granholm.

(Credit: Martin LaMonica/CNET)

DETROIT--Venture investor and former Oracle president Ray Lane argued on Wednesday that U.S. is losing out to other countries in emerging energy technologies.

Lane, now a partner at famed venture capital firm Kleiner, Perkins, Caufield & Byers, said that the U.S. needs to view clean-energy technologies as a way to rebuild a shaky economy and position the country for long-term growth.

He spoke at the Business of Plugging In conference here on Wednesday, where many speakers emphasized the benefits of electric vehicles to reduce oil imports, cut carbon emissions, and revitalize the ailing auto industry.

But Lane made the case that there are implications to national economic competitiveness as well. There are technology disruptions happening in energy that will shake up a number of industries, but the U.S. is being outpaced in investing in this area by other countries.

"We can expect to live in the next 10 years where China will outspend us in order to invent the technologies," Lane said. "We may be buying their technology if we do not ramp up our seriousness. We led electronics, we led biotech, we led the Internet. We are not leading in this arena."

Lane said that other countries, including Germany and China, have policies that are more conducive to technology innovation and manufacturing. Auto efficiency standards are one third more efficient than the U.S. in China, which spends a higher percentage of economic output on research and development and has set aggressive goals for wind power adoption.

"Engineering must come back to be our number one priority," Lane said. "This is wrong time to cut R & D."

The Fisker Karma at the Mazda Raceway Laguna Seca in August.

(Credit: Fisker Automotive)

American start-up Fisker Automotive may be about to unveil the first truly affordable plug-in hybrid for the U.S. market.

Ray Lane, managing partner at Kleiner Perkins Caufield & Byers, told an audience at the Always On Going Green conference in Sausalito, Calif., on Tuesday that there could be a big announcement within the next week about a $39,000 plug-in hybrid. Though he would not say who, he mentioned that it was a car for the U.S. market and that it was not strictly electric, according to a report from Cleantech Group.

While Kleiner Perkins has investments in several transportation start-ups such as Think Global and EEStor, the likely company from its repertoire to make such an announcement would be Fisker Automotive.

Fisker has already unveiled the Karma, a four-door luxury plug-in car that can go from 0-62 mph in 6 seconds, and has a maximum speed of 125 mph. But Fisker has set the tentative price for the car at $87,900, making it not much cheaper than Tesla's Roadster sports car.

Fisker CEO Henrik Fisker also told CNET in an exclusive May 2008 interview that advances in battery and software technology would allow his company to offer a $40,000 plug-in car in about four or five years.

Perhaps that day has come sooner than the founder was willing to let on at the time.

But it may not be as soon as others have speculated. Fisker's European press office sent out an e-mail on Monday informing journalists the company has canceled a press conference originally scheduled for this week at the 2009 Frankfurt auto show.

The creaking electricity grid got a shot in the arm on Tuesday from venture capital firm Kleiner Perkins Caufield & Byers, which is leading a $75 million investment in smart-grid start-up Silver Spring Networks.

The money will fund the company's expansion globally, Kleiner Perkins partner John Doerr said in a statement. He called implementation of the smart grid "one of the most important clean-technology initiatives of the coming decade."

It's one of the first investments doled out from KPCB's $500 million Green Growth fund, established earlier this year with money earmarked for the costly task of making energy-related technologies commercial.

The "smart grid" is a catchall term to describe a number of products for adding automation to the electricity distribution system. For consumers, it can mean in-home energy displays or appliances that communicate back to utilities to save energy during peak demand times.

Silver Spring makes equipment and software for utilities to upgrade their grid. Its devices on utility poles can broker information over the Internet between a home's smart meter and a utility, to warn of an outage or to send energy usage information.

Smart grids comprise one of the most promising approaches to making the power grid more efficient. By curtailing demand at certain times, utilities can avoid building new power plants to meet growing electricity usage.

Kleiner Perkins' big bet on green technologies was the subject of an extensive profile in The New York Times Magazine on Sunday.

The article said that the storied venture capital firm, which was an early backer of Internet icons Amazon.com, Google, and others, has invested in about 40 green-tech start-ups but is still awaiting a successful financial "exit" of an initial public offering or acquisition.

Existing investors Foundation Capital, JVB Properties, and Northgate Capital will also participate in the Silver Spring Networks funding.

Kleiner Perkins Caufield & Byers on Thursday announced the expected creation of a fund dedicated to growing green-technology firms.

The Silicon Valley venture capital firm said $500 million out of a larger $1.2 billion fund will go to "growth stage" green-technology firms that need additional capital to commercialize their work.

Kleiner Perkins partner John Doerr

(Credit: Martin LaMonica/CNET News.com)

Kleiner Perkins established a $100 million green-technology fund in 2006 for start-up seed funding. This Green Growth Fund will make investments of $10 million to $50 million to ramp up existing companies, Kleiner Perkins executives told The Wall Street Journal.

The structure of the fund reflects one of the primary differences between the energy business and related sectors such as information technology or biotechnology.

To make a mark commercially, clean-tech companies often need a substantial amount of capital to either develop the technology or demonstrate that their technology can work on an industrial scale. Investments in biofuel refineries or solar-power plants, for example, typically amount to hundreds of millions of dollars.

In a speech last month at the MIT Energy Conference, Kleiner Perkins partner John Doerr noted that Google--another Kleiner investment--required $25 million before it went public, while fuel cell company Bloom Energy has already gone through $250 million and is still developing its product.

"The world has embarked on the next industrial revolution," Kleiner Perkins partner John Denniston said in a statement. "The growing sense of global urgency over our twin energy crises--climate change and energy security--is now driving businesses to become green, consumers to demand green, and policymakers to drive policies to accelerate the market adoption of green products."

Part of the money for the later-stage green-growth fund will come from Generation Investment Management, an investment firm co-founded by Al Gore, who is now a Kleiner partner.

Kleiner, Perkins, Caufield & Byers is forming a "Green Growth" fund for green-tech start-ups looking to scale up their operations.

Kleiner Perkins investor John Doerr looks for late-stage Green Growth fund.

(Credit: Martin LaMonica/CNET Networks)

PEWeek reported on Thursday that the fund will be over $400 million and have input from Kleiner Perkins partner Al Gore.

The idea behind a late-stage funds such as this is to give up-and-coming companies the money to ramp up, rather than develop their core technology.

This late-stage funding is particularly important in the energy business because companies require a large amount of capital to test their technology at commercial scale.

Google.org, the philanthropic arm of Google, has also chosen to invest this sort of capital as part of its energy initiative to avoid what is called the Valley of Death--the transitional terrain that start-ups face when shifting from technology development to commercialization.

Kleiner Perkins partner John Doerr last week gave the keynote speech at the MIT Energy Conference where he said that green tech needed much more investment.

Doerr said that although there were pockets of green tech where too much money is chasing too few good deals, the amount of money going into energy is far too little to address climate change.

Kleiner's first green-tech fund was closed in 2006.

CAMBRIDGE, Mass.--Famed venture capitalist John Doerr is conflicted. He says pace of innovation in green technologies, breathtaking in the past five years, is far from fast enough to address the scale of the world's energy problems.

Doerr was the keynote speaker at the MIT Energy Conference here Saturday. He alternated between expressing wonder at the progress in addressing global warming and discouragement at the overall state of affairs.

Kleiner Perkins investor John Doerr sees a 'green tech' boom whose scale is falling short.

(Credit: Martin LaMonica/CNET Networks)

The theme of the conference is "scale," as in finding the right technologies and policies to address burgeoning global energy demand without polluting the planet to the point of dangerous greenhouse gas levels.

Doerr is a partner at Silicon Valley venture capital icon Kleiner Perkins Caufield & Byers, where he has invested in Google, Amazon.com, Sun Microsystems, and several other successful technology companies.

Thousands of people have seen a video of a talk Doerr gave at the TED (Technology, Entertainment, and Design) conference last year, in which he broke down crying, telling the story of how, after seeing the movie Inconvenient Truth, his teenage daughter angrily told him to fix the global-warming problem because his generation caused it.

Two years ago, Kleiner Perkins announced the creation of its first green-tech investment fund, and Doerr has become a high-profile investor and policy advocate in the field.

Altogether, the company has invested more than a half million dollars in 30 green-tech ventures, many of which Doerr touted during his talk.

Fisker Automotive, founded by a former Aston Martin and BMW sports car designer, will have a four-door plug-in hybrid electric vehicle out next year. Another investment, Amyris Biotechnologies, is using synthetic-biology engineering to create low-cost malaria drugs and synthetic biofuels that mimic the characteristics of hydrocarbons.

Doerr also successfully lobbied to pass the California Global Warming Solutions Act of 2006, which seeks to reduce greenhouse gas emissions by 25 percent by 2020.

"So what's happened in the couple of years since my daughter yelled at me? We've invested a lot, we've lobbied a lot, and I've learned a lot. Think about it: who would have thought that a designer of gas guzzler vehicles would make a 100-mile-per-gallon plug-in hybrid?" he said in reference to Fisker Automotive.

But despite all the accomplishments of these innovative companies, he struck a downbeat tone on both technology and policy. After listing some of the technologies being generated by Kleiner Perkins-backed companies, he said:

"To the point of scale, who would of thought that all of that is not going to be enough? To get solutions that scale, we are going to have to find answers that are economic for all people everywhere. We are going have to use policy to harness innovation to make sure the right thing to do is the profitable thing to do, so that it becomes the probable thing to happen. There's more money that flows through markets in a day than all the word's governments in a year...

The energy market is $6 trillion. I like to say it's the mother of all markets. Compared to that Internet, which is a big deal, this is much bigger, much more exciting. But the challenge is much larger. Going green--solving that problem will be largest transformation on the planet."

Doerr said the entire planet needs to "reindustrialize" to adopt less-polluting forms of energy.

Many people have called for the equivalent of an Apollo Project or Manhattan Project in the United States to solve the energy challenge. But Doerr said that those, which were multibillion-dollar, single-government agency projects, "fail miserably to convey the size of the challenge."

To underscore how little is being done at the federal level, he said government funding in U.S. research and development on renewable energy was less than $1 billion last year, while oil giant Exxon makes $1.1 billion in revenue a day.

The $5 million in federal research for geothermal power is "so low, it's almost criminal," he said.

He predicted that the three leading presidential candidates will address climate change regulation far more aggressively than the current Bush administration, which has opposed mandates and sought to stay outside United Nations-led climate talks.

Despite Doerr's concern for inadequate action on clean energy, he touched on the question of an investment bubble in green tech. Overall, he said there isn't a bubble, but he does see some problems.

"There's too much money chasing too few good ventures, despite the size of this problem," Doerr said.

Venture capitalists have poured billions of dollars into the sector, making it one of the fastest-growing areas of investment, though it still garners fewer venture capital investments than biotech and information technology. That rapid capital influx, along with the challenges of large capital demands and regulatory complexity in energy, have caused concern that investment has been too aggressive.

In response to a question, he said the venture capital industry will not change to fund more capital-intensive energy projects. And he noted that returns in venture funds have been getting worse.

But he predicted that returns for green-tech investments will be good, once more recently funded start-ups go public in 2009.

Echoing the comments about a "global-warming bubble" made earlier this week by investor and tech luminary Bob Metcalfe, Doerr said "booms," or large investment waves, are generally good for the economy.

"I think that we're at the beginning of a green-tech boom. I can assure you we don't have an overinvestment to deal with the scale of the problem."

The superheroes of venture capital haven't exactly had a completely smooth year in green tech.

Kleiner Perkins Caufield & Byers wasn't the first VC firm to get into green tech. Nth Power, NGEN Partners, Draper Fisher Jurvetson and Mohr Davidow Ventures got there first, but Kleiner brought a lot of attention and prestige into the field, and helped push green tech toward the top of the VC agenda in the second half of 2004.

The firm also began to put money into a lot of companies with a pretty good amount of fanfare. John Doerr even cried in public at the TED conference to show his commitment.

This year, though, came with its rough patches.

For one thing, some of the firm's portfolio companies suffered setbacks. Thin-film solar-panel maker Miasole had to delay production and swap CEOs. Rumors that the company laid off 40 employees was confirmed by three former Miasole employees, according to Greentech Media. The Web site also said founder Dave Pearce may have left the company.

Similarly, supersecretive EEStor (another portfolio company) delayed production. Board member and Dell alum Mort Topfer also left the board, according to reports.

Mascoma, the cellulosic-ethanol maker, fared better. It landed grants with Michigan and Tennessee to build plants in those states, but its first plant, in New York, will come on line about a year late.

Conversely, Kleiner's name has been absent from the big success stories. EnerNoc and Comverge both launched IPOs this year. In solar, Suntech Power Holdings and First Solar saw tremendous growth. None of these are Kleiner companies.

Other companies outside the firm's portfolio had delays too. Tesla Motors put off its car and switched CEOs as well. But this is Kleiner Perkins we're talking about here.

In the 650 area code, people instinctively genuflect at the mere sound of the name. When Al Gore joined the firm a few weeks ago, it was national news, though many wondered what he would exactly bring to the table. The firm gets praised for its foresight on a regular basis, so it's fair (in my book, at least) to harp on the setbacks.

Still, the firm's portfolio does contain a number of strong companies: Mascoma, Amyris Biotechnologies, Ausra, GreatPoint Energy. And the firm commands billions of dollars, while I shop at Target.

Next year could easily be a completely different story.