Gore puts green into capitalism
Former Vice President Al Gore has become a partner in Silicon Valley’s best-known venture capital firm, Kleiner Perkins Caufield & Byers. It was a natural fit for the inventor of the Internet.
That tired gibe aside, the move signals a new direction for the masters of America’s seed capital, who really sponsored development of the Internet, as well as new telecommunications in general, and bio-technology. Kleiner Perkins was there for Google before it became a verb. Its portfolio has also included Netscape, Sun Microsystems and Amazon.
The buzz in Silicon Valley now is green energy. Kleiner Perkins has already invested about $270 million in clean energy technologies, and has an additional $200 million allotted from a newly raised pool of capital. Verdiem, a Seattle maker of software that reduces computer network energy usage, has received some Kleiner Perkins money.
The Silicon Valley’s energy alliances reach all the way to India.
Gore, meanwhile, co-founded Generation Investment Management, with an emphasis on socially and environmentally responsible companies. Generation has about $1 billion under management. Gore’s enlistment with Kleiner Perkins will include an exchange of directors, and the sharing of Generation office space in London.
Gore’s star power should give fresh impetus to venture capital interest in green technology, and his off-the-grid approach to implementation suits the industry’s capabilities. As reports on his alliance with Kleiner Perkins have noted, transformation of the United States’ energy infrastructure – highways, pipelines, refineries – is beyond the industry’s reach, even with its impressive financial resources. Just building a new transmission line between Spokane and Seattle, for example, could easily soak up $200 million, and then some.
Of course, that’s not what venture capital is all about.
Perfect a new battery, take solar technology to a new level, or just rethink home insulation and the energy and environmental effects could be revolutionary. And spectacularly profitable, although the home run in new energy technology has yet to be hit.
Gore may have some thoughts on breakthrough technologies, but his contributions at Kleiner Perkins are much more likely to be motivational, and political. Just by bringing the former vice president aboard, his new firm becomes the flagship of energy venture capitalism. When deal flow is critical to success, it may take just one idea to Googleize energy practice in the United States.
As for policy, Gore can at least run interference for innovations that might be frustrated by outdated laws, or nurtured by legislative accommodation. Production tax credits, for example, helped trigger widespread adoption of wind power by the nation’s utilities.
On the other hand, just by drawing attention to venture capital energy endeavors, Gore can rally those who believe markets offer a better way to solve the nation’s energy problems than the tinkering done in Washington, with the prospect of $4-a-gallon gasoline to show for it. His successor as vice president, Dick Cheney, made his fortune at Halliburton, whose most recent innovation has been to move its headquarters to Dubai. His loyalties remain in the oil patch.
We will not break our dependence on petroleum for a long time, but at least Gore has been looking over the horizon as an author, Academy Award winning film-maker and Nobel Prize winner.
Silicon Valley’s leaders have started looking ahead as well.