Kleiner Perkins’ Ellen Pao on Opportunities in Greentech Investing
I had an opportunity to sit down recently (along with several other journalists) for an informal chat with Ellen Pao, a partner at Kleiner Perkins Caufield & Byers and a member of the famed Menlo Park, CA, venture firm’s GreenTech investment team.
Pao was in town to be the keynote speaker at the inaugural Cleantech San Diego Showcase, an event the non-profit industry group intends to hold four times a year as a way of calling attention to emerging green technologies and the local companies developing them. Pao provided an overview of KPCB’s GreenTech team, which consists of 20 partners in the United States and China. The firm has invested about $680 million over the past five years in nearly 50 startup companies, most of which remain in stealth mode.
Pao was gracious, but not especially forthcoming. For example, she told us that KPCB’s greentech investments include funding San Diego-based V-Vehicle Co., which announced plans earlier this year to build a new line of “environmentally friendly and fuel-efficient” cars in Northeastern Louisiana. The green aspect of the V-Vehicle’s design apparently figures in the startup’s request for a $250 million low-interest loan under the Department of Energy’s Advanced Technology Vehicle Manufacturing program. But V-Vehicle has not explained publicly how or why its car is eco-friendly, which has led to conflicting media reports (with some describing it as an electric vehicle). But Pao declined to explain why V-Vehicle is green, saying KPCB doesn’t talk about portfolio companies that are still in stealth mode—even though partners John Doerr and Ray Lane participated in a news conference that Gov. Bobby Jindal of Louisiana held in June to announce the state’s support for the project.
Pao said KPCB’s cleantech investments are divided among startups that are focused in a variety of green categories, including energy efficiency, cars and transportation, batteries (especially companies developing new energy storage capabilities for electric utilities), renewable energy, and “carbon management and sequestration,” i.e., technologies for preventing carbon dioxide from wafting into the atmosphere by capturing the gas and piping it underground.
“There’s a lot of passion around trying to solve the global warming problem,” Pao said. “We’re looking, though, for big solutions. We have some projects, and we think it’s a big opportunity once there is a price on carbon.” She was referring to a “cap and trade” proposal put forward by the Obama Administration that would set strict limits on pollution that causes global warming, but would allow large polluters to pay for the right to exceed their limits by basically paying for unused pollution rights from other organizations that don’t pollute as much as they are allowed under the law.
Pao also pointed out some of the many deficiencies in the national electric grid infrastructure, saying, “Our current energy infrastructure isn’t very robust.” Of the estimated $1 trillion of energy Americans use every year, Pao said more than half is wasted, for example, by generating electricity to maintain baseload generation levels at times when power consumption is low. “So we use a lot of energy, and we waste a lot of energy.”
But as Pao pointed out in her talk, “You can’t manage what you can’t measure.” As a result, KPCB’s has invested in certain technology startups such as Redwood City, CA-based Silver Spring Networks, which specializes in technology, software, and services that enable utilities to transmit and receive information from any point on the power grid.
In her overview, Pao identified both cap and trade and expanding the grid as “smart policies” for the federal government, and which help encourage technology innovation in potentially fruitful areas. In addition, she cited three more:
—Establishing incentives for utilities to implement renewable power and energy efficient technologies by re-aligning their rate structures to reward such behavior. Pao said utility rate structures (which are set by state regulatory agencies) now reward utilities for the more electricity they sell.
—Efficiency and energy savings through improved energy use in buildings and in transportation.
—Encourage research and development. Pao said R&D is crucial, and one of the insights that she shared about KPCB’s cleantech investment philosophy is that the firm looks for ways in which it can anticipate advances in science. She said one of the things KPCB partner Bill Joy says is to look for the limits of science, and then go out to the labs and talk with the researchers who are working in that particular area.