It’s easy to invest in the growing number of cleantech startups — open wallet, toss money out onto the eco-friendly craps table. But it’s proving a lot harder to get returns from the companies, which often have longer exit cycles, and can require more capital than many traditional tech investments. As Fortune pointed out in November, five years after Kleiner Perkins made its first green investment, the firm had yet to make an exit.
That’s why we’ve been carefully watching the green thumb of granddaddy venture capital firm Sequoia Capital, which after more than three decades has helped fund industry pillars including Apple, Cisco, Electronic Arts, and Oracle. Sequoia has made fewer investments in the cleantech space than many of its green-minded peers, but if its electric vehicle battery bet A123Systems goes public, which it’s reportedly considering doing as early as this year, its batting average could be among the best in the cleantech investing world.
Sequoia partner and National Semiconductor Co-founder Pierre Lamond told us the firm’s cleantech strategy has been “more cautious” than its peers.
“We have not fallen into the feeding frenzy of our friends.
So far, in addition to A123Systems, the company has just publicly invested in efficient diesel engine company Achates Power, methanol fuel cell company Oorja Protonics (though that company is still in stealth), and efficient light company Luxim (which raised more funding recently). Lamond said Sequoia has several other cleantech investments as well, such as a solar photovoltaic startup, but that the firm isn’t talking about them right now.
That’s a relatively small cleantech portfolio for a big firm, compared to peers at DFJ, Kleiner Perkins and Khosla Ventures, which have seeded dozens of cleantech startups. Sequoia’s cleantech strategy is to “not invest in concepts,” according to Lamond. “The company has to have a real product and a competitive advantage.” It’s an obvious answer, but something he says the company learned with its big hits and major misses in the dot-com boom. Hoping to not recreate some of the hype-induced failures of the late 90s, Lamond says he has looked at many ethanol companies and passed on all of them.
Lamond and Sequoia are, mind you, actively looking for more cleantech entrepreneurs with which to do deals. “If you know of any send them my way,” he joked. We’ll see if A123Systems follows through on its IPO plans; if it does, Sequoia may be on the verge of an awesome cleantech exit performance, by percentage alone.