Investor Khosla: '60 Minutes' cleantech segment full of errors

LOS ANGELES Tue Jan 14, 2014 8:05pm EST

LOS ANGELES Jan 14 (Reuters) - Venture capitalist Vinod Khosla on Tuesday issued a harsh rebuke to "60 Minutes" a week after the news magazine TV show broadcast a report saying that Silicon Valley and Washington have little to show for their investments in clean technology.

In an open letter to both "60 Minutes" and its network, CBS, Khosla said a Jan. 5 segment for which he was interviewed "grossly misrepresented the state of the sustainable energy industry."

The letter, which was posted on the website of Khosla's Menlo Park, California firm, Khosla Ventures, went on to list what he called "numerous" reporting errors in "60 Minutes."

The news magazine's segment on investments in advanced energy, sometimes known as cleantech, characterized Khosla-funded biofuels maker Kior Inc as "riddled with delays." It quoted a biofuels specialist, Robert Rapier, as saying Khosla "overpromised and under-delivered" on his investments.

Kior shares, which traded at $15 when the company went public in June 2011, have plunged and closed at $1.36 on Tuesday.

The report also raised questions about the success of the U.S. Department of Energy's loan guarantee program, which spent billions on funding companies with advanced energy technologies. A number of companies that received those loan guarantees, including solar panel maker Solyndra and battery maker A123, turned out to be high-profile failures.

In his response to the segment, Khosla said his cleantech portfolio is profitable and that "our returns are significantly above the venture capital average."

"We invest in companies that have high failure probabilities, but the wins far outweigh the losses," Khosla added.

Khosla Ventures has three funds open to outside investors. As of June 30, 2013, Khosla Seed's internal rate of return is 10.7 percent, while Khosla Ventures III is 17.5 percent, according to Calpers data. Both those funds were raised in 2009. Khosla IV, raised in late 2011, is considered too young for returns to be meaningful.

The venture capitalist, who made his name as one of the co-founders of Sun Microsystems, also said the DOE loan program has had a 97 percent success rate. DOE officials were not immediately available to verify that figure.

The "60 Minutes" piece listed several of the programs failures but just one of its successes - electric car company Tesla Motors Inc, which has repaid its $465 million loan.

Other completed projects funded by the DOE loan guarantee program include several large-scale solar power plants, including the Exelon-owned Antelope Valley Solar Ranch in Lancaster, California and NextEra Energy Inc's Desert Sunlight project in California's Riverside county.

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