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Gore's latest green venture

The former VP and Nobel laureate joins a Silicon Valley firm that funds climate solutions.

November 13, 2007|Michelle Quinn and Abigail Goldman | Times Staff Writers

SAN FRANCISCO — Al Gore is trying to bring more green to green technologies.

Venture capital dollars are pouring into the business of fighting climate change, and Gore will get to invest millions as a partner with Kleiner Perkins Caufield & Byers, a prominent Silicon Valley venture firm.

The Menlo Park firm, which was an early investor in Google Inc., Sun Microsystems Inc. and hundreds of other high-tech companies, is betting heavily on start-ups working on solar energy, biofuels, water treatments and other solutions to environmental problems.

Gore, who recently won a Nobel Peace Prize for sounding the alarm about climate change, is expected to help Kleiner Perkins win more deals. He gives its portfolio companies a powerful political ally who can mine his connections to Fortune 500 chief executives, lawmakers and government officials.

There's already plenty of money to go around. Venture capitalists pumped $892 million into U.S. green tech companies in the first half of 2007, up nearly 70% from $525 million in the same period a year earlier, according to Ernst & Young and Dow Jones Venture One.

The attention is bound to increase with Gore taking a hand in investing the money that universities, pension funds and other big clients contribute with the expectation of hefty returns.

What's less clear is whether those new businesses can generate substantial profit. Green tech has yet to produce a dazzling initial public offering to announce its arrival, like the Internet had in 1995 with Netscape Communications Corp. -- another Kleiner Perkins company.

In an interview, Gore acknowledged that environmental investing had become fashionable but said he planned to work with experts to sift through many ideas to find the good ones.

"There is a flood of money coming into this area," he said. "A lot of it is undisciplined. When you open the hood and look inside, you see people shrugging their shoulders and saying, 'We don't know what we're going to do.' There is a much smaller flow that is channeled through disciplined, experienced, highly organized, professional teams."

Concerns about climate change have driven the fundingboom, said Joe Muscat, Americas director of Ernst & Young's venture capital advisory group. The company forecasts that $2 billion will be invested this year in companies working on green technologies in North America, Israel, Europe and China.

"The debate about climate change isn't whether it is or isn't," Muscat said. "It's about what we can do about it. Plus, the markets are huge."

Gore has deep ties to Silicon Valley. John Doerr, a partner at Kleiner Perkins, backed Gore in his 2000 presidential campaign, and some tech industry insiders jokingly campaigned for a Gore/Doerr ticket in 2004. Gore also sits on the board of iPod maker Apple Inc. and is an advisor to Internet search leader Google.

Doerr and his fellow partners are beefing up their investments in environmentally focused companies. The firm plans to channel one-third of its current $600-million fund into technologies that reduce carbon dioxide emissions.

Among Kleiner's investments are Altra Biofuels Inc., a Los Angeles firm that works with ethanol and biodiesel, and Lilliputian Systems Inc., based in Wilmington, Mass., which makes miniature fuel cells for portable electronic devices.

Including Gore, 13 of the venture firm's 23 partners spend some or all of their time investing in green technologies.

Kleiner Perkins has a history of bringing in celebrity partners. Colin Powell, the former secretary of State and chairman of the Joint Chiefs of Staff, joined as a "strategic limited partner" in 2005. But Gore said he was no figurehead. He plans to attend weekly Kleiner Perkins partner meetings either in person or via videoconference from his home in Nashville.

His chief aim will be to develop an alliance between Kleiner Perkins and London-based Generation Investment Management Inc., a social activist investment firm co-founded by Gore that takes stakes mostly in public companies.

Doerr joined the firm's board, and Kleiner Perkins is folding its London office into Generation's. He and Gore said the firms' combined efforts would bring products to the marketplace faster.

Gore's joining Kleiner Perkins was "an exciting event" because he understands how politics really works, said Zach Gentry, chief executive of Adura Technologies, a San Francisco start-up working on wireless energy management. "He is so well-connected to Washington and the whole policy infrastructure."

Charles Corbett, a professor at UCLA's Anderson School of Management who studies the link between good business practices and environmental protection, said Gore as venture capitalist made sense.

"The clean tech market is very active at the moment," he said. "VCs are interested in bringing expertise and name recognition on board, while Al Gore is undoubtedly interested in being part of the process of identifying and enabling promising technologies."

The announcement marked the latest second act for a man who has specialized in them. Gore, 59, joins Kleiner Perkins during a time in which he won the Nobel and starred in "An Inconvenient Truth," a documentary about his efforts to stop global warming that won an Academy Award.

Despite increased speculation that he would join the 2008 presidential race, Gore repeated that he didn't intend to run.

"I have no plans to be a candidate again," Gore said. "I'm not ruling out participation in the process sometime in the future."

Gore said he would donate his Kleiner Perkins salary to the Alliance for Climate Protection, a foundation he co-founded in Palo Alto that specializes in public policy and the environment.


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