Kleiner Perkins launches $500 million Green Growth Fund

Because clean-tech companies need more capital than other industries, the VC fund intends to focus on relatively large, later-stage investments.

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 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.

 

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