This week I will be looking at something a bit different than the green tech companies in past articles. This article spotlights a venture capital firm that specializes in green tech investments, created by one of the co-founders of Sun Microsystems. The company is Khosla Ventures and I will look at its founder, the firm’s history, and what types of companies it invests in.
Khosla Ventures, as described on its website, is a venture capital firm focused on early stage companies in the Internet, computing, mobile, silicon technology and clean technology sectors. Based in Menlo Park, California, the firm manages approximately $2.3 billion of investor capital as well as earlier funds that Mr. Khosla funded himself. This article will focus on its clean technology sector investments.
First some background information on its founder, Vinod Khosla. Mr. Kholsa graduated from the Indian Institute of Technology with a degree in electrical engineering and earned a masters degree in biomedical engineering from Carnegie Mellon University and eventually an MBA from Stanford University in 1980. He, along with two others, founded Daisy Systems, a computer-aided design system for electrical engineers, which eventually they took public. His work on Daisy Systems led him to co-found Sun Microsystems in 1982 to build workstations for software developers, which also went public, making him a very rich man. In 1986 he joined the capital venture firm Kliener Perkins and in 2004 founded Khosla Ventures.
Khosla Ventures has two main types of funds. According to Khosla Ventures’ website, there is the seed stage fund that is for “a crazy idea that may have a significantly non-zero chance of working,” and a main fund, in which “a reasonable portion of the risks and milestones associated with seed-type investments have been mitigated, though there is still significant technology and execution risk.”
Capital for Khosla Ventures’ first two funds came exclusively from Mr. Khosla. In 2009, a third fund was opened to the public and focused on cleantech and information technology start-ups. A seed stage fund focused on extremely high-risk, early-stage companies followed. In 2011 $1 billion was raised for a new fund that will devote half of its investment to cleantech.
Kholsa Ventures’ cleantech portfolio consists of investments in over forty companies spread across a wide range of cleantech areas including plastics, chemicals, electricity efficiency, agricultural, and batteries. Click here to see the cleantech portfolio diagram. Some of the companies are fairly well known such as Gevo, Cogenra and KiOR while many are not. Khosla Ventures’ website provides a list and brief description of all the companies where they have invested. Interestingly, Khosla Ventures invests in all types of greentech companies. They invest in technologies now in vogue such as solar and wind power, but also across the cleantech spectrum even to areas such as biofuels, which are under pressure due to lower oil prices. Also, Khosla Ventures tends to invest in more early stage companies while many venture capital firms prefer more mature ones.
Since Khosla Ventures is a private company financial statements are not publicly available. Like most capital venture firms, a large number of the companies they have invested in will fail, some will survive and a few will hit it big. The fact that Khosla Ventures continues to be able to attract new funds speaks to the fact they are making money for their investors.
I highly encourage you to go to the Khosla Ventures website and check it out. On the site you can find, as mentioned before, a list of the current companies they have invested in as well as more detailed information on what type of investments they seek and what they value in prospective business plans. In addition, an address is provided so you can submit your own business plan with a promise to get back to you within a couple of weeks with their feedback. A perusal of the website will definitely spur any entrepreneurs to continue working to make their ideas a reality. Also included on the site is the 1982 business plan submitted for Sun Microsystems as added incentive to dream a little.
Source: Khosla Ventures
Disclaimer: This article is intended to be informative and should not be construed as personalized investment personalized advice. You are responsible for your own investment decisions.