Midsummer, based in Jarfalla, Sweden, has developed equipment and processes to make thin film solar panels, using the material copper indium gallium (di)selenide, or CIGS. If the term CIGS rings a bell, that’s because the ashes of CIGS firms have burned brightly — and burned their investors’ cash – in recent years.

Silicon Valley’s MiaSolé, which had originally impressed investors with its high conversion efficiencies, was sold at a bargain-basement price to Chinese renewable energy firm Hanergy earlier this year. Reports are that the firm was snapped up for 10 percent of the price tag the board was after. There was also Solyndra, Nanosolar, Heliovolt, and others that have struggled.

But beyond just CIGS, the entire solar panel market is laboring under the weight of oversupply, and manufacturers have production capacities for about twice as many solar panels than the market needs. Even the big manufacturers are struggling and one of the biggest, China’s Suntech, has been unable to pay bondholders, with the subsidiary responsible for much of its manufacturing slipping into insolvency.

So it shouldn’t come as a surprise that it’ll be difficult to sell new equipment to prospective manufacturers. But that hasn’t stopped Sweden’s Midsummer. It believes its new approach to CIGS deposition offers major advantages.

Optical disk approach to solar panels

Midsummer’s approach is to produce individual CIGS thin film cells on a stainless steel substrate. The cells are “punched out” of the stainless roll before deposition. “We wanted to produce many small thin film solar cells and then later on put them together in a module,” says CEO Sven Lindström.

This approach draws on optical disc manufacturing techniques, treating each individual CIGS cells in much the same was a CD or DVD would be created. It certainly marks a departure from current thin film semiconductor deposition, which tends to be employed in a continuous process, either onto a glass substrate or a roll of stainless steel. The closest relative to the Midsummer process in PV would be MiaSolé, which uses a stainless steel substrate cut into cells. But even MiaSolé uses a continuous deposition process with the cells being sorted into efficiencies batches afterwards.

What’s the advantages of the CIGS semiconductor deposition onto individual cells? Lindström believes that it allows R&D improvements to be made more quickly and incrementally, one cell at a time. The company is aiming to produce 200 to 400 cells per hour on its equipment, and says it can change the process parameters a little for each individual cell. Midsummer employs its 2D bar coding system for the substrate, so individual cells can be logged on a database and efficiencies assessed.

Midsummer claims that other advantages include that its cells can be employed in a flexible module, which is a market segment that has been largely left open after Global Solar and Uni-Solar ceased production. The difference between Midsummer’s approach and those companies’ technologies is that Midsummer’s cells are significantly more efficient. Midsummer can produce modules with an efficiency of 14 to 15 percent, while Global Solar and Unisolar were producing modules for closer to 8 to 10 percent.

In addition, Lindstöm says the weight per square meter of Midsummer’s modules is below three kilograms per square meter, which is more lightweight than competitors. Flexible modules have been touted as a solution for commercial rooftop panels or membrane roofing, where weight load is an issue. Light weight, flexible panels could also open up other more unusual markets, like on the roofs of trains.

In terms of costs, the Midsummer claims its flexible module can be made for $1.10/W and with glass for $0.70. It has a roadmap for $0.50/W by the end of 2014, which is slightly ahead of competitors. It also believes that such costs can be achieved at a relatively small scale, tens of megawatts instead of hundreds or gigawatts.

It should be noted that while Midsummer has a line up and running in its labs in Sweden, but that the efficiency and cost results have not yet been tested in scale production. And with very few solar panel manufacturers looking to add capacity, there’s a chance that won’t happen soon.

“Nobody is buying”

While all of these advantages and this new approach appears promising, it could be incredibly hard to find buyers willing to invest in new solar panel equipment. “Nobody is adding new capacity,” at least for the next 12 to 18 months, says Finlay Colville, VP at NPD Solarbuzz. “This makes it a really big problem for anybody who is introducing a new tool,” particularly turnkey thin film lines.

But that doesn’t mean all is lost for Midsummer. It reports that an unnamed Chinese customer has one of the Midsummer lines currently installed for testing. The solar market’s geographical shift away from traditional European markets and to new ones in the Middle East and East Asia may also provide opportunities.

A GTM Research report released recently predicted that the Middle East and Africa will provide 1 GW of demand for solar panels in 2013, an increase of over 600 percent on 2012. The strong performance of thin film panels and CIGS’ in hotter temperatures could also give that technology an advantage. GTM Research’s Shyam Mehta thinks that if some of the CIGS cells that have reached 19 percent efficiency in a lab setting, could be applied to commercial production, there could be good prospects for the technology.

Even with a PV manufacturing market under considerable stress, innovation is still required to drive efficiencies up and costs down and Midsummer may allow for iterative improvements, cell by cell, for the first time in thin film. CEO Lindstöm reports that the company is well funded at present, but for its approach to make an impression it will have to start selling equipment sooner rather than later.

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This week Reuters published a report, citing anonymous sources, saying that Kleiner Perkins held a meeting with its limited partners (the funds and endowments that put money into Kleiner’s fund) where Kleiner leader John Doerr apologized for a weak fund performance and promised to do better in the future. Kleiner closed on a new $525 million fund a little less than a year ago, and at the time made a bunch of changes.

Kleiner was one of the most aggressive and high-profile venture capital firms to put money into cleantech startups, and at one point had been hoping to invest a third of its funds into green companies. Part of Kleiner’s poor fund performance no doubt has to do with its greentech investments that haven’t made the firm money. And actually a bunch of its investments struggled mightily, like Miasole, Fisker Automotive, and Amonix.

I’ve written a lot on why cleantech and VC is a difficult match. Check out these pieces from over the years:

• “Greentech investing: not working for most”
• “The perils of cleantech investing”
• “We can thank Moore’s Law for the cleantech VC bust”

But one of the more nuanced reasons that I haven’t spent much time on is passion: what I think was investor passion for doing good, for helping fight global warming and for saving the planet. It’s hard to paint that type of enthusiasm as a bad thing. But I think the drive to be known as an investor that makes the world a better place was something that could have distorted the lens used to find investments that will make money.

A lot of the venture investors in Silicon Valley are cut from the same cloth. Many are environmentally-leaning Californians who have kids and who are in their mid-50s and 60s. Many made their fortunes — either through startups or investing — off of the IT sector. The general mindset several years ago was to look for what came next after IT, and greentech provided them with something they could feel good about doing and providing the right legacy for their kids.

That feeling of righteousness is a powerful drug that can cloud rational thinking sometimes. A startup with a potentially game changing innovation that can save the world should succeed — we all want it to succeed — but how much of these investments were hopeful money, blinded by do-gooder passion, as opposed to rational money?

That Doerr put his own personal money into some of these companies as they struggled highlights just how strong the do-gooder pull is and how personal these investments were sometimes. Reuters reported last month that Doerr dipped into his own pocket for the about $2.5 million that struggling solar company Miasole needed to make payroll before it was sold. I’ve heard rumors that Miasole isn’t the only company that Doerr, and Kleiner Partner Ray Lane, put personal funds into. When those companies fail, it’s a slap to the identity of the investor as the savior.

More money going into greentech innovations is the right thing to do from the perspective of the world. The planet needs this technology. But it will likely have to come from non-VC pockets of money, like government funds or project finance.

While Kleiner is the highest profile of the venture firms to make an aggressive bet on cleantech and then (seemingly) retrench, it by no means is the only one. VantagePoint Venture Partners admitted recently that it had to curb its cleantech fund due to lack of interest from investors. Private equity firm Hudson Clean Energy Partners also halted its clean energy fundraising process and the managing director resigned.

Other firms, like Draper Fisher Jurvetson and Mohr Davidow, have shifted strategies to focus on cleantech lite, or cleanweb startups. There’s a few VC firms left that are still trying to do investments in new energy tech and sustainability-focused startups like Khosla Ventures, Braemar Energy Ventures, and Lux Capital, but these are few and far between. The silver lining for those guys is that there’s a lot less competition out there now.

Clearly over-exuberant save-the-world optimism wasn’t the only problem with cleantech. The sector is vast, complex, science-heavy, partly regulated, partly government dependent, and many areas haven’t seen innovation in decades.

We’ll be watching closely to see if some of the cleantech 2.0 strategies are actually working and if those include that same do-gooder passion.

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If Fisker is able to close on either of these deals, it could move its business to China and gain the funds to start manufacturing its second car the Atlantic, as well as start paying back its loan to the Department of Energy. Fisker has been looking for suitors — partners and acquirers — for months, as it wrapped up a year with an incredible amount of problems.

But $350 million for 85 percent stake is a major discount on the original valuation of Fisker. The company has raised a billion dollars in funding, and at one point back in 2011 had raised money at a reported valuation of $2.2 billion. But in 2012, the company struggled heavily and I had heard that it was looking to raise money last year at a significantly lower valuation. Clearly, when discussions are for majority stake deals for between $200 million and $300 million, there’s been massive discounting.

Fisker isn’t the only energy tech company that’s looking to sell for a discount to Chinese conglomerates. Lithium ion battery maker — which sold batteries for Fisker’s electric car — went bankrupt and its assets are being sold off to Chinese auto tech giant Wanxiang for $256.6 million. A123 Systems held the largest IPO in 2009, raising some $371 million, and went public at $20 per share. A123 also raised more than $350 million from private investors when it was still a startup.

Wanxiang has also invested in struggling electric car company Smith Electric Vehicles. Battery maker Boston Power also turned to Chinese investors to take its electric car battery business to the next level, as did Protean Electric. Electric car company Coda Automotive — which is also struggling — has a joint venture with China battery maker Lishen and a deal with auto maker Great Wall Motors Company.

Chinese companies and the Chinese government are very interested in amassing next-gen technology for electric cars. China is projected to be the largest electric car maker and market in the world, and is already the world’s largest auto market.

It’s not just electric car assets that Chinese companies want. Wanxiang invested $420 million into GreatPoint Energy, a company based in Cambridge, Mass. that converts coal into cleaner-burning natural gas. And Chinese power company Hanergy acquired the assets of Miasole for $30 million (Miasole had raised hundreds of millions of dollars from private investors).

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It’s no surprise that LPs are growing cold on the sector. I discussed this with a panel of investors late last year at the VERGE conference. Salzman tells VentureWire that the reality from the LP community was: “show us the money.” Other firms that have pulled back (slightly or a lot) or changed their strategy to focus on green IT include Mohr Davidow, NEA, Draper Fisher Jurvetson, and Kleiner Perkins.

VantagePoint had a few wins, but it also has had many losses. On one hand VantagePoint backed Tesla and Solazyme, which both went public. But the company also backed firms like MiaSole, Serious Energy, Tendril, and Better Place, which have struggled. Bright Source was planning on going public but pulled the IPO in the 11th hour.

Salzman embodied the aggressive all-in approach of cleantech investing. He told me in an interview in late 2011 that “when it comes to greentech investing, it’s basically all or nothing.” And instead of becoming more cautious when the market cooled following the 2008 recession, Salzman and VantagePoint seemed to double down.

VentureWire asked Salzman whether focusing VantagePoint on cleantech was a mistake, and Mr. Salzman told them: “I wouldn’t admit it if it was.”

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The solar industry calls this technology “building-integrated photovoltaics” or BIPV. Some of this new capacity will come from thin film solar panels that will be able to be printed right onto building materials, like shingles, steel roof casing, and windows. A lot of companies have been gunning for this market, and many have been held back by the difficult solar production market in 2012. There are at least 53 companies working on this tech, says Pike.

Dow launched its solar shingle product about a year ago in Colorado and began selling them in California and Texas earlier this year. Miasole, which was sold to China’s Hanergy in a firesale, had been working on BIPV, as had Arizona-based Global Solar Energy, which recently started layoffs and curbed manufacturing. Dozens of solar module makers went bankrupt or struggled in 2012, due to an oversupply and rock bottom prices.

But the BIPV market could provide a bright spot, says the Pike report. The value of the BIPV market could quadruple over the next five years from $606 million in 2012 to $2.4 billion in 2017. The market will also be encouraged by a rebound of home sales and construction.

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I imagine a similar focus on high volume manufacturing at other successful hardware companies like Intel and First Solar, that make millions of units per month. This is no ordinary feat and is achieved only by a disciplined approach, operational rigor and a clear vision that “he who controls manufacturing eventually controls the market.”

Silicon Valley is the mecca of innovation worldwide, which makes the recent lack of successful greentech hardware startups difficult to comprehend. While there are a variety of reasons for this issue, one thing that might be missing from the greentech ecosystem is this Samsung-style intense focus on manufacturing.

Innovation is good, but scaled up manufacturing matters too.

Silicon Valley startups producing solar panels, batteries, energy efficient windows and other volume hardware products will have to achieve manufacturing at the scale of tens of thousands of defect-free units per month to make a dent in the marketplace. Having a superior product specification might not be enough if the companies are unable to produce the goods cost-effectively in mass numbers. In fact, their very ability, or inability, to do so might end up being the differentiator between survival and failure.

Technology transfer from R&D to manufacturing requires a different crew geared toward an operations-driven mindset and a brute force methodology that can quickly deliver a stable process. The 24/7 lifestyle that is required to deliver, say an 80 percent up-time, is painstaking, time consuming and requires dedication and commitment. At Samsung, the technology transfer engineers were treated like celebrities and provided with five star accommodations at the factory site. Special bonuses and incentives were tied to the speed of progress. One might say that’s an unfair comparison, but the reality is that Silicon Valley is competing against several such cleantech companies from all over Asia. Unless the startups have extremely revolutionary products that can tolerate lower manufacturing yields, there is a need to manufacture as efficiently, if not better, than the competition.

Having said all that, Silicon Valley was the birthplace of the “Intel Way” and has had a rich history of volume manufacturing. But an exodus of semiconductor fabs from the Valley to nearby states has taken the manufacturing focus out of the Valley and along with it, a lot of the manufacturing talent. This, in combination with the rise of Asia and the difficulty in obtaining financing for manufacturing has made it even more challenging for greentech manufacturing startups to scale up.

How to get around the manufacturing learning curve

Here are a few ways that greentech startups could help overcome issues with scaling up to volume manufacturing:

1). Obtain an experienced crew that can transfer R&D processes into a pilot line with an extreme focus on improving yields. Ensure that every employee understands that true success comes not from obtaining one-off records or champion results but from volume data obtained from processing hundreds of samples. At Samsung, no champion results were ever reported as an accomplishment in an upcoming line since those results are meaningless until proven at scale. Companies like Miasole in Silicon Valley took the right approach of involving Intel manufacturing experts for their solar panel factories and it would be wise for others to follow suit.

2). Manufacturing is a costly endeavor and gives the most bang for buck when it’s running 24/7. Hence it’s advisable to not wait for a perfect product but transfer an intermediate process and iron out kinks in the production process. A lower specification product with 90 percent yield might have better economics than having a higher performing product with a 50 percent yield, assuming the market will accept such a product for some time. There is no better example than First Solar who has continued to sell less than 12 percent efficient solar panels for a long time proving that there is room for a lower specification product if you make manufacturing extremely efficient.

3). Excellence in manufacturing depends on the company’s ability to expand and build future lines. For a Silicon Valley startup, a pilot line locally in the area might make sense to be close to the R&D team. But it might be wise to take the cue from other high tech companies and move manufacturing to nearby states given their lower costs of land and permitting, robust manufacturing ecosystem and availability of manufacturing talent. Several companies like Stion, Soladigm and others have already taken that approach, which is a good sign.

The importance of manufacturing to ensure a greentech hardware company’s success cannot be stressed enough. High-yield manufacturing allows a company to reduce the cost of its product and reinvest the profits into newer lines and more R&D. All of this requires a cultural change across the company.

The startups that truly understand the differences of personnel and resource requirements for manufacturing vis-à-vis R&D have a greater chance of success. Those that don’t might perish to the Asian giants who believe it or not, have figured out the art of volume manufacturing.

Kunal Girotra is a Director of Process Engineering at ThinSilicon, a solar cell R&D subsidiary of China Solar Power. Prior to that, he worked in various R&D and technology transfer roles at Samsung’s LCD division for advanced LCD and OLED displays. He can be reached at kunalgirotra@gmail.com.

Images courtesy of Miasole, Shutterstock/Mypokcik, First Solar.

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The San Jose company says it will suspend production at six of the 12 production lines at Fab 2 for solar cells and 20 percent of the solar panel production in the southeast Asian country. SunPower also will cut about 900 employees, most of them located in the Philippines.

SunPower’s CEO, Tom Werner, issued this statement:

“Industry conditions continue to be challenging and while it is never an easy decision to reduce positions, we must make prudent decisions to effectively compete in an industry with significant overcapacity. Additionally, we’ll further our efforts to reduce costs and improve operational efficiencies.”

In April this year, SunPower announced it would shut down another solar cell factory, called Fab 1, in the Philippines. The goal was the same: to reduce costs so that it could sell its solar panels at more competitive prices. SunPower makes the most efficient silicon solar panels on the market, but its special technology also is more expensive. Its strategy has been to charge higher prices for the more efficient solar panels. But this strategy doesn’t work so well when there is a big oversupply problem.

Its main rivals, many of them in China, have been selling their less efficient solar panels at far lower prices. The pricing battle partly contributed to a trade complaint against Chinese solar cell makers, and the U.S. Department of Commerce decided last week to impose tariffs on imported silicon solar cells from China.

The tariffs aren’t likely to stop solar panel prices from falling, however. Chinese companies can skirt the penalties by buying solar cells from countries such as Taiwan and assembling them into panels in China. This approach will still increase their production costs, but not nearly at the levels of the tariffs.

SunPower sold a majority stake to French oil giant Total last year in order to gain financial help. SunPower said its 2012 sales forecast remains unchanged, and it will provide more details about its cost-reduction plans when it discusses its third-quarter earnings on Nov. 1.

SunPower isn’t alone in idling production lines and laying off a huge number of employees. First Solar has been doing that. Some veterans in the industry, such as Q-Cells in Germany, went bankrupt or have been sold. Many startups that tried to scale up production in the past two years failed because they couldn’t reduce their manufacturing costs fast enough. Solyndra and Abound Solar are two examples. Others, such as MiaSole, got scooped up on the cheap by conglomerates looking to add a diverse set of solar technologies and services in their portfolios.

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The year-long trade case has divided U.S. solar companies — from manufactures to installers and project developers — over whether imposing tariffs on Chinese manufacturers will reverse a sorry streak of factory closures and bankruptcies. The case is now before the U.S. International Trade Commission, which held a final hearing on the case yesterday and plans to issue a decision by Nov. 7. The U.S. Department of Commerce is due to issue its final decision next Wednesday.

Both the commission and the commerce department have issued preliminary rulings that found fault with Chinese companies. The commerce department imposed preliminary tariffs of less than 5 percent for the subsidy claim and roughly 31 percent for major Chinese players and nearly 250 percent for the rest for the anti-dumping claim. The commission’s job is to determine whether Chinese manufacturers’ actions have hurt American manufacturers. The final decision on the tariffs by the commerce department will be in effect only if the trade commission finds that American manufacturers have suffered harm.

The trade complaint alleges that the Chinese companies, which have risen to dominate the global solar manufacturing market over the past five years or so, have received unfair subsidies from the Chinese government and that has enabled them to sell their products at below fair market values.

Doomsday prediction

When a group of manufactures, led by SolarWorld, filed the complaint against Chinese silicon solar cell makers last October, predictions about the positive or dire impact of the case began to fly. SolarWorld, which is based in Germany and runs a factory in Oregon, said tariffs are necessary to help American manufactures stay competitive and in business. The other side, which includes not only Chinese manufacturers but also project developers and equipment retailers that have benefited from cheaper solar panels, warned of rising installation costs and severe job losses.

So far, the gloomy picture of rising solar panel prices and project costs hasn’t materialized. As we pointed out back in May, when the commerce department issued the tariffs for the anti-dumping claim, other market forces and clever strategies to side-step the tariffs (or the willingness by manufactures to absorb tariffs without raising prices) meant consumers weren’t likely going to feel the pinch. The U.S. market for solar panel installations is forecast to grow 71 percent in 2012 from the previous year. Leases have become a popular way for homeowners to go solar. Solar panel prices have continued to fall since those preliminary tariffs went into effect.

Meanwhile, the preliminary tariffs haven’t provided much breathing room, if at all, for many American solar manufacturers. Many venture-backed startups have gone bankrupt or they are getting snapped up on the cheap. MiaSole, which makes ultra-thin solar panels using copper, indium, gallium, and selenium, is being sold to China-based Hanergy for $30 million (a fraction of the amount of venture capital it raised). First Solar and SunPower are still struggling and working on strategies that will make them less susceptible to the price swings in the wholesale market for solar panels. GE put on hold its dream of becoming a major solar panel maker by not completing a factory in Colorado.

Solar bumper crop

So what’s going on here? Essentially supply and demand remains out of whack for the global solar market. The glut began to show its impact and push down solar panel prices in early 2011, and its presence still lingers. Chinese manufacturers have continued to suffer big financial losses, along with their rivals in Europe, Japan and the U.S.  Of course, the Chinese companies may experience a tougher time in the U.S. market if the commerce department ends up levying much heavier tariffs.

Suntech’s new tech

Despite the bumper crop, producers of silicon, which is used for making most of the solar panels on the market today, plan to bring more factories online, according to NPD Solarbuzz. The global production silicon production capacity will likely grow 22 percent in 2012 and another 18 percent in 2013. Prices for silicon could drop by 52 percent this year, Solarbuzz said.

While the U.S. is wrapping up the case against Chinese companies, solar trade disputes have cropped up elsewhere. Trade complaints against China have now been filed by SolarWorld against Chinese manufacturers in Europe. The Chinese government, which is reportedly working on rescuing some of the biggest solar manufacturers, is looking at imposing tariffs on silicon from the U.S.

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Hanergy plans to buy MiaSole for a measly $30 million, according to the letter, and also reported by the San Francisco Chronicle. While the Silicon Valley solar company has been mum about how much venture capital it’s raised since its inception in 2001, published reports have put the figure somewhere between $400 million and $500 million by the end of 2011. Earlier this year, the company raised $55 million.

MiaSole was desperate for a white knight to rescue it from oblivion. After years of research and development, the company seemed to have finally nailed its manufacturing process to making solar panels out of copper, indium gallium and selenium (CIGS) that are more efficient than many rivaling CIGS thin film companies. But it was running out of money and needed to expand its production and attract customers. CEO John Carrington joined MiaSole late last year, and he made a public appeal in December for investors and partners who could bring money and sales and marketing expertise.

Hanergy may not be a well-known company in the U.S., but it’s large renewable energy producer in China. We pointed out in this post back in June that Hanergy is a company worth watching not only because of its large hydropower and solar panel production plants in China, but also because of its involvement in installing solar energy equipment. Hanergy won a 3-year deal to install solar panels on Ikea’s stores in China. The company also has built a wind energy generation business within China.

With the purchase of MiaSole, Hanergy is knitting together a global solar thin film empire. Last week, the company completed the purchase of CIGS thin film maker Solibro from Q-Cells in Germany. Hanergy said it would increase Solibro’s production for the European market. With MiaSole’s purchase, Hanergy, of course, will have a CIGS thin film manufacturing base in the U.S.

Solar startups have been picked off one by one cheaply – or filed for bankruptcy – over the past 19 months because the global solar market has been plagued by a glut of solar panels. The fast-falling panel prices – roughly 50 percent in 2011 alone and 30 percent so far this year – have put an enormous pressure on companies to lower their prices. That pressure is particularly difficult to handle for startups, which often have higher manufacturing costs initially when they are scaling up production of their technology. And many of them indeed were trying to raise more money and make that leap to mass production when the financial market crisis hit in late 2008, followed by the oversupply of solar panels starting in 2011.

One of the remaining CIGS thin film companies from Silicon Valley, SoloPower, hopes to reverse the trend. The company inaugurated its first large factory in Portland, Ore., last week and plans to start making use of a $197 million federal loan guarantee to expand production.

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Blodget focuses his article on how in the early 2000′s “Kleiner lost its edge,” and missed investments the first time around in the next generation Internet companies like Facebook, Twitter, Zynga, LinkedIn, and Groupon. Then in 2011, seemingly to make up for those missed investments, Kleiner launched its digital growth fund and tried to associate itself with hot web companies by buying stock in these companies from existing investors. Subsequently those later stage investments in Facebook, Groupon, and Zynga have been disasters, says Blodget.

So what exactly was Kleiner doing while it missed those early next-gen web deals? A big chunk of the firm’s attention and finances were going to greentech startups. A third of its 12th, 13th and 14th funds went to greentech, Kleiner Partner Ray Lane told me in an interview in the Summer of 2011, and the firm at that point had 14 active greentech investing partners. (It still lists 20 execs under the greentech section).

Cleantech hasn’t delivered the returns expected on the timeline expected for most venture capitalists. A few VC’s are still positive on the sector (like Nancy Pfund), but many are not and a good portion of the generalist investors have moved away from it. Kleiner’s Lane said last year that Kleiner wasn’t moving away from investing in cleantech — but that was last year.

Since then, both greentech focused partners Ray Lane and Bill Joy have moved away from making new investments for Kleiner. And many of Kleiner’s greentech portfolio companies are struggling to scale up. Thin film solar company Miasole recently did layoffs, electric vehicle maker Fisker Automotive has hit financing and scaling problems, smart grid company Silver Spring Networks never made it to its planned public debut, solar company Amonix shuttered it factory and V-Vehicle has basically gone kaput. Other Kleiner portfolio companies have been more successful, like Opower, Nest and Clean Power Finance, but those companies have yet to find exits, and make Kleiner money (and those firms are also all IT based).

Back in 2009, Kleiner’s John Doerr even noted that if Kleiner had seen how bad the market was going to crash, it probably wouldn’t have started it’s green initiative. Lane has expressed similar sentiments to me about how difficult the recession has been on greentech startups trying to raise money and scale up.

Kleiner could still make some money in greentech over the long term, but it’s clearly not meeting the traditional VC timetable of returns that Kleiner’s been used to. I’ve noted before that some of the major web home runs could have made up for these longer horizon greentech companies, but if those web investments aren’t their either, then that’s a big problem. There’s clearly a point when a firm has to return its funds, particularly when younger upstart firms like Andreesen Horowitz seem to be making the fund back in spades.

Is it the end of an era for Kleiner and did greentech play a large part? What do you think?

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