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Summary:

DFJ was actually better than most at cleantech investing. Alas, even the solid ones have moved on.

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Venture capital firm Draper Fisher Jurvetson announced its next $325 million fund this week, and also highlighted changes and transitions that have been happening at the firm. There are changes with execs managing the fund — the firms’ founders won’t be investing and Managing Director Jennifer Fonstad has moved on as well — but there’s also a shifting focus, including an official move away from cleantech investing.

DFJ has steered clear of cleantech investments for awhile now. Dow Jones first reported this way back in 2012. You could also tell the winds were changing because in late 2011, DFJ partners Raj Atluru and Josh Raffaelli, both of whom did substantial cleantech investments, left to join Silver Lake Kraftwerk, Silver Lake’s sustainable resources growth fund.

SolarCity

But the interesting part about DFJ putting the nail in the coffin of cleantech — for this latest fund, anyway — is that the firm actually didn’t do too shabby as a cleantech investor: it had two of the biggest VC-backed IPOs to come out of the cleantech bubble in recent years. That would be electric car maker Tesla Motors and solar financier and installer SolarCity. They also invested early in energy demand response company EnerNOC.

Yes, both Tesla and SolarCity are Elon Musk ventures, and DFJ (particularly Steve Jurvetson) has had a long relationship with Musk. But they are also both energy game changers that have grown into formidable and large companies.

Tesla Oslo

Tesla managed to survive the valley of death, has sold tens of thousands of its second-generation Model S electric car and even turned a quarterly profit. SolarCity is now responsible for almost a third of all new solar panel projects being built on rooftops in the U.S. these days.

DFJ also backed Seamicro, which isn’t necessarily a cleantech company, but is an energy-efficient server maker. Seamicro was bought by AMD in early 2012.

DFJ also has other promising cleantech startups that haven’t exited, but are leaders in their field, like solar thermal company BrightSource Energy. Though, the solar thermal market has been more difficult with the cost of solar panels so low. Biofuel startup Synthentic Genomics, run by genomics guru Craig Venter, is also a promising one, though its deal with Exxon didn’t end up panning out.

All of this goes to show just how awkward the fit is between traditional venture capital and cleantech investing. Even when firms make decent bets, the timelines, capital required and returns delivered aren’t competitive with investing in other digital sectors.

Cleantech startup investing is just hard money — even the ones who did it right have left.

  1. Felix Hoenikker Thursday, February 6, 2014

    they did it right? I don’t think so not by a long shot. They had two winners but what was their return? Not great which is why they’re not in cleantech so to say they did it right isn’t accurate. That is the issue in cleantech VC, most didnt actually know what they were doing. Why you have folks losing money and going on 60 minutes and calling it learning lessons when the reality of it is they invested and didnt make money. The issue is typically you dont get to keep doing work you’re not good at but these folks seem to stick around and raise more funds. Good example is khosla, is Calera bigger than GE as he claimed would happen? Nope not even close, because these folks have everyone convinced they’re some kind of expert, I know bc I was a cleantech VC and continue to watch this madness go on.

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