By Sarah McBride and Nichola Groom
SAN FRANCISCO/LOS ANGELES Jan 16 In the spring
of last year, John Doerr received some bad news: Miasole, the
solar-panel maker backed by his famed venture capital firm,
Kleiner Perkins Caufield & Byers, was on the verge of
If Miasole went under, it would be a dramatic collapse for a
once-promising startup that in its heyday had been valued at $1
billion. It would also be a failure for Doerr, who for years had
argued passionately that clean technology could be the biggest
business opportunity of this century.
So Doerr, best known for making billions from backing the
likes of Google, Netscape and Amazon in their
infancy, dipped into his own pocket for the roughly $2.5 million
that Miasole needed to make payroll, according to two people
familiar with the situation. The highly unusual personal loan
allowed Miasole to stay afloat long enough to be sold to a
Chinese renewable energy company for $30 million.
The quiet fix shows the lengths to which Doerr was willing
to go to avoid the embarrassment that would have come with a
collapse. It also underscores U.S. cleantech's dramatic turn for
the worse after the financial crisis, due in part to competition
from China and a surge in the production of abundant and cheap
natural gas at home.
The market changes have left Kleiner, the most active
venture capital firm in cleantech, with dozens of investments
that may never pay off, threatening its image as the gold
standard of venture capital.
Doerr, 61, remains bullish on cleantech and in an email to
Reuters called Miasole a well-run company that "was caught in a
perfect storm." He did not respond to questions about his
"Certainly the cleantech sector has challenges, but it would
be a mistake to underestimate the size of the opportunity,"
Doerr said in the email, adding revenues in Kleiner's cleantech
portfolio rose 70 percent over 2011, to $2.4 billion in 2012.
Kleiner's financial performance, measured by the returns its
funds have delivered to investors, is not known. VCs, though,
are often judged by their ability to successfully exit startup
investments through initial public offerings or through sales to
Of the 38 "greentech" investments listed on Kleiner's
website, only Miasole has been sold. Three others have gone
public - biofuels maker Amyris Inc, microinverter maker
Enphase Energy Inc and Chinese inverter maker Sungrow
Power Supply Co Ltd - but all are trading far below
their IPO prices.
Some Silicon Valley entrepreneurs say Kleiner, while
well-regarded, is no longer at the very top of the VC heap. Such
impressions matter when VC firms compete to fund the most
promising startups, and getting in on the best deals is in turn
key to future success.
At the annual AlwaysOn Venture Summit in December, Kleiner
Perkins did not make the list of top 10 venture capital firms.
Conference organizer Tony Perkins said he worked with Morgan
Stanley and the 451 Group, a research firm, to draw up the list
based on successful venture "exits."
Kleiner partners "are not in the top of founders' minds when
they think about VCs," said Paul Graham, founder of the
prestigious Y Combinator technology incubator.
Reuters spoke to more than a dozen entrepreneurs and venture
capitalists about the top VC firms, and they more commonly cited
Sequoia Capital, Accel Partners, Greylock Partners and
Andreessen Horowitz than Kleiner. Kleiner's last knockout
success was Google's IPO in 2004.
"Every firm has cycles," Amanda Duckworth, a spokeswoman for
Kleiner, said in an email when asked to comment on the perceived
decline in the firm's reputation. She said that Kleiner has made
many high-profile investments outside cleantech and beefed up
its Internet team in recent years, and that its partners and
portfolio companies regularly win awards and remain highly
Indeed, several Kleiner investors and entrepreneurs told
Reuters they were pleased with the firm, which successfully
raised a new $525 million fund last year.
"The firm remains very vibrant and very energized and very
engaged," said Amy Falls, chief investment officer at
Rockefeller University. "We are very happy to be invested with
them." Over the decades, Kleiner has made Rockefeller many
millions, she said.
Some believe Kleiner could yet have the last laugh, and
applaud Doerr for jumping into the sector early and smoothing
the path for others.
"Five years from now, mark my words, a cleantech revival,"
said Scott Sandell, a partner at NEA, a large venture firm that
co-invests with Kleiner in many companies.
The alternative energy business looked highly promising in
the mid-2000s. Gasoline prices were rising, and then-President
George W. Bush signed into law a renewable-energy loan-guarantee
program that would funnel billions of dollars to alternative
Former Vice President Al Gore's effort to educate the public
about climate change was also making a mark: His movie "An
Inconvenient Truth" won two Oscars in 2007. Gore joined Kleiner
as an adviser later that year.
Doerr emerged as cleantech's biggest cheerleader, with a
commitment that was personal and political as well as financial.
"Green is the new red, white and blue," he told a gathering
at Silicon Valley business forum the Churchill Club in early
2006, tying green investing to U.S. energy independence.
Influenced by Gore's work on climate change, Doerr said his
teenage daughter, Mary, had spurred him to tackle the issue.
In a 2007 talk, Doerr quoted his daughter as saying: "Dad,
your generation created this problem. You had better fix it."
With an estimated net worth of $2.5 billion, Doerr is an
active philanthropist. But he has repeatedly stressed that
cleantech is good business, not a charitable endeavor. "Going
green is bigger than the Internet. It could be the biggest
economic opportunity of the 21st century," he said in 2007.
Kleiner announced in 2006 that it would dedicate $100
million of its latest fund to greentech - and then doubled that
commitment to $200 million. Two years later, it launched the
$500 million Green Growth Fund. Kleiner poured the cash into
dozens of solar, wind, geothermal, energy efficiency and
renewable fuels startups.
Further greening seemed inevitable with the 2008 election of
President Barack Obama, who at the time was a strong proponent
of a national market to limit and trade carbon emissions. The
outlook brightened further with passage of the American Recovery
and Reinvestment Act in 2009, which provided $27.2 billion for
energy efficiency and renewable energy projects.
But things changed fast. The financial crisis stifled
investment in solar and wind projects, while efforts to pass
cap-and-trade legislation collapsed in Congress. The explosion
in natural gas development made possible by "fracking"
undermined the economics of many renewable energy projects.
Then came the bankruptcy of solar-panel maker Solyndra,
which had received more than half a billion dollars of federal
support. That unleashed a storm of criticism, which made it even
harder for green companies to secure financing to grow.
The sudden shift in market conditions and investor sentiment
hit some of the Kleiner-backed firms hard.
Amonix Inc, a solar company, was forced to close a Nevada
factory last year. Luca Technologies Inc, which uses
biotechnology to produce natural gas, canceled IPO plans at the
eleventh hour last April due to difficult market conditions.
Silver Spring Networks Inc, a smart-grid company, and
biofuels maker Mascoma Corp have yet to follow through on
mid-2011 plans to go public. AltaRock Energy Inc, a geothermal
energy startup, was forced to abandon its first project in 2009
due to drilling problems. Another project to demonstrate its
technology is underway in Oregon.
Fisker Automotive Inc, an electric car maker, has been
plagued by production delays and hasn't built a car in more than
six months. It is currently seeking a partner.
The companies did not respond to requests for comment on
their relationships with Kleiner or their current situation.
REMEMBER THE INTERNET
While Kleiner focused on cleantech, which has accounted for
more than a quarter of all its investment dollars since 2007,
its competitors were lavishing money and attention on the
consumer Internet. Accel Partners bet on social networking site
Facebook Inc in 2005 when it was worth about $100
million. Firms like Charles River Ventures and Spark Capital
first jumped into microblogging service Twitter Inc in 2007,
when it was worth around $25 million.
When Kleiner tried belatedly to catch the social media wave,
prices had exploded. In early 2011, Kleiner invested in Twitter
at a $3.7 billion valuation, Facebook at a $52 billion
valuation, and Groupon Inc at a $5 billion valuation,
according to published reports of valuations from the time.
Kleiner said it did not agree with the reported valuations.
Based on its cost, the firm said, its investment in Facebook is
up 39 percent; Twitter, up 111 percent; and Groupon down 38
percent.(VCs generally aim to earn at least three times their
Meanwhile, Kleiner's other earlier-stage consumer Internet
investments, including the social network Path Inc and
reputation-measurement service Klout Inc, have yet to make a
splash. One that did, social games developer Zynga Inc,
was less of a victory than it might have been because Kleiner
held on to all its shares post-IPO, only to see the stock plunge
from an initial offering price of $12 to trade below $3, where
it is trading these days.
Kleiner faces other questions, too, including who might
replace Doerr as de facto leader of the firm should he retire.
Doerr said in the email that the firm has developed many
leaders, including technology-focused partners Ted Schlein and
Randy Komisar, and healthcare partner Beth Seidenberg.
And it's wrestling with the bad publicity - and possible
financial liability - from a much-discussed sexual harassment
and retaliation suit filed by Ellen Pao, a former partner.
Kleiner has said the allegations are without merit.
The firm has made a concerted effort over the past several
years to burnish its credentials as an Internet VC, hiring Mary
Meeker, the highly regarded former Internet analyst at Morgan
Stanley, along with up-and-coming stars such as Twitter's former
engineering vice president Mike Abbott and Square's former
products director Megan Quinn.
At the same time Kleiner has scaled back its cleantech
activity, though even last year it was the most active VC firm
in the cleantech sector, according to research firm the
Cleantech Group, participating in more than 20 funding rounds.
On the sidelines of a Kleiner party in November, Doerr said
that the firm has more profitable cleantech portfolio companies
than any other venture firm. When asked if he regretted pushing
so hard into cleantech so early, Doerr gave a qualified no. "I
wish," he said, "we'd known then what we know now."