SAN FRANCISCO Tom Perkins, co-founder of Kleiner Perkins and the backer of companies ranging from Genentech to Google, believes much of the venture-capital industry has set itself up for failure.
"Mathematically, there's no way that all venture capital in America will make 10 to 1," or $10 for every dollar invested -- a fairly typical return in past years -- Perkins told Reuters.
There is too much money chasing too few companies, he said, and the increasingly large sums invested mean failures will hurt more.
Firms hit by outsized failures will find it hard to raise money for future funds, he said, leaving the playing field to a select few with the cash and experience to outperform, including his eponymous fund, Kleiner Perkins Caufield & Byers, and Sequoia Capital "and a handful of others."
But that vote of confidence does not signal approval of everything done by Kleiner Perkins, where he is a partner emeritus. He said that if he were still taking a day-to-day role, he would shy away from much of the cleantech investing that the firm champions currently, mostly because of the large sums of money and government subsidies many cleantech firms require.
Instead, he said he would be scouring university research labs looking for novel technologies that could be commercialized -- the model for one of his earliest successes, biotechnology firm Genentech.
Perkins is also known for providing the capital that fostered companies such as Google Inc (GOOG.O), AOL Inc AOL.N and Tandem Computers. The onetime head of research at Hewlett-Packard Co (HPQ.N) also founded his own laser-technology company, University Laboratories, before starting Kleiner Perkins in 1972 with semiconductor veteran Eugene Kleiner.
When News Corp (NWSA.O) holds its next shareholder meeting October 21, it will mark an end of an era for Perkins, 79. He will relinquish his last corporate board seat -- a sea change for a man who says he once held 14 directorships.
A phone-hacking scandal has shaken News Corp, leading to the departure of several top executives and speculation that Chief Executive Rupert Murdoch's son, James Murdoch, may be prosecuted for bribery.
Perkins scoffed at that speculation and said the hacking scandal has nothing to do with his own departure, which he said was long planned. He said he offered to stay on to see the company through the scandal, but Rupert Murdoch decided it wasn't necessary.
These days, Perkins spends much of his time sailing, scuba diving and piloting his submarine, Dr. No, named after the James Bond movie and novel.
He spent part of the summer in the Pacific island nation of Palau, practicing deep dives with the sub, which can descend as far as 400 feet.
Next summer, he plans to take Dr. No to the Tonga Channel and dive alongside humpback whales to examine their habits on the ocean floor. While most whale-friendly parts of the ocean are too deep for such studies, the Tonga Channel is just 300 feet, making it ideal for his project, he said.
He sees his biggest challenge as avoiding irritating the whales and meeting an end worthy of the novel Moby Dick. "I don't want to get sunk like Ahab," he said.
(Reporting by Sarah McBride; Editing by Edwin Chan and John Wallace)