According to Bloomberg:

“…the IRS found Lane, 66, participated in a “sham” tax shelter, generating improperly claimed losses of $251 million to offset income, according to appeal papers filed May 6 in U.S. Tax Court in Washington. Lane argued that the IRS was wrong to say that his partnership, Vanadium Partners Fund LLC, lacked “legitimate business purpose.”

The past year has been pretty much a nightmare for Lane. In April, he stepped down (under pressure) as chairman of HP’s board after a tenure that included the overpriced acquisition of Autonomy. He also stepped back from day-to-day responsibilities at Kleiner Perkins Caufield and Byers, where he had been a partner. Topping it all off, he left the board of troubled Fisker Automotive.

Many critics wondered how Lane could serve both as chairman of HP during a troubled time in the history of a tech icon and keep the KPCB gig. But going back further, as COO and then president of Oracle, Lane helped straighten the company out after a series of embarrassing “accounting” issues.

Oracle CEO Larry Ellison pretty much forced Lane out and some say that experience colored Lane and Ellison’s relationship ever since. Ellison, for example, blasted HP for dismissing then-CEO Mark Hurd over an expense report/sexual harassment issue, then hired Hurd as president at Oracle. HP sued Oracle over that. It’s all been pretty tawdry.

In any case, kudos to Bloomberg, which has been on top of the HP saga for the past year or more.

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A couple months after that, boy megastar Justin Bieber got one for his 18th birthday as a present from his manager. The car even had its television debut driven by Ashton Kutcher, playing an internet mogul, on Two and a Half Men.

Fisker’s Project Nina, later called the Atlantic, which was never manufactured.

That summer gas prices were predicted to rise about 40 percent, leading to a boost in sales of fuel-efficient cars. A year earlier, electric-car company Tesla held a blockbuster IPO, and Nissan’s low-cost electric car the LEAF had gone on sale. The country seemed like it might finally be ready for electric cars, and perhaps ready for the first car enthusiast’s plug-in hybrid, as the Fisker Karma was being called.

But the limelight was short-lived for Fisker. In the months and years that followed, the company spiraled downward, burning its dreams and reputation to the ground — just like faulty parts did to a couple of its cars. Fisker has been reported to be on the brink of bankruptcy, lawsuits are piling up, and a government hearing is reportedly in the works.

There are a lot of crash-and-burn stories in Silicon Valley. It’s in the nature of entrepreneurs, startups and investors to take risks and sometimes fail. But it’s not often that you see such a dramatic downfall.

Those that have been tarnished by Fisker’s demise include venture-capital grandaddy Kleiner Perkins; Fisker’s executives, many of whom had long distinguished careers in Detroit; and Fisker’s broker, Advanced Equities, which helped the company raise hundreds of millions of dollars and has now disbanded entirely. Fisker raised and spent more than a billion dollars over its lifetime.

A handful of celebrities and politicians that championed the company have also been caught up in its wreckage, as has the Department of Energy, which ended up loaning the company close to $200 million. The entire electric-vehicle industry could take a hit because of Fisker.

How did this do-gooder dream that was supposed to combine Silicon Valley-backed tech innovation, gorgeous design, and eco-friendly hot-rod cars turn out so horribly wrong for so many people? That’s what I’ve tried to find out in a dozen interviews in recent weeks with people at the center of the Fisker story.

Summer of 2011

It was in that summer of 2011 — even as the company outwardly was showing some signs of hitting its stride —  that I first started to wonder if something wasn’t going awfully wrong at Fisker. Mitt Romney had just announced his presidential run, a federal grand jury had indicted John Edwards, and we were enduring the second hottest summer in the U.S. on record.

I had been following Fisker since its founding four years earlier, and the company was on the cusp of delivering its first electric hybrid sports car, the Karma, to customers. Though the delivery was running 18 months behind schedule, there was a sense of anticipation among the media, investors and car enthusiasts.

Then two things happened that gave me pause. An auto industry executive that I trusted made me an offhand bet that included the idea that Fisker’s second car — then called Project Nina and partly funded by a Department of Energy-approved $529 million loan — might never see the light of day. Fisker had deep pockets, such high-profile investors and so much media hype — I really hadn’t considered something so shocking. Clearly I lost that bet.

The second unsettling event of the ’11 summer was when Fisker invited the media to watch “the delivery” (re-enacted reality TV- show style) of one of the first Karmas to Kleiner Perkins partner Ray Lane. Outside Kleiner’s offices, in the hot parking lot, Lane held up the keys in celebration of the delivery and talked about the joys of driving his Karma as a large group of photographers, reporters and TV crews captured the moment.

Afterwards, I did a long interview with Lane back in the air-conditioned comfort of the Kleiner offices, where he explained to me his counterintuitive thesis for backing Fisker: Either get the valuation high enough so they don’t get crushed on dilution or get low-cost loans that are high leverage for equity investors. “My partners thought I was out of my mind. But I had a thesis,” said Lane.

Kleiner Partner Ray Lane receives the keys for his Fisker Karma, Summer 2011.

The media learned a couple weeks later that the Karma hadn’t received any of the needed regulatory approvals — so the car wasn’t legally driveable on public roads. It wouldn’t get full certification from the EPA until three months later.

The early days

But to understand Fisker’s missteps you have to go back to at least 2006. Fisker’s founder Henrik Fisker was a well-known car designer formerly with BMW and Ford who had his name on hot cars like the Aston Martin DB9 and the BMW Z8 Roadster. In 2004 he started a luxury-car company called Fisker Coachbuild with his long-time buddy Bernhard Koehler, who was later his co-founder at Fisker. In late 2006, Henrik Fisker started working on a contract basis with Tesla, creating designs for Tesla’s second car, a sedan, later called the Model S.

This was also the year that Al Gore’s Inconvenient Truth debuted, and some in the Hollywood elite were starting to embrace hybrid cars and eco causes. Henrik Fisker has told reporters that he was inspired to build Fisker Automotive after seeing DiCaprio drive a Prius to the Oscars and thinking he should have something more high-end. DiCaprio later became an investor and marketing partner to the company.

In 2006 and 2007, cleantech investing was the all the rage among VCs. Research firm the Cleantech Group called 2006 a “watershed period” for cleantech venture investing. VCs put $3.9 billion into global cleantech startups that year, an increase of about 50 percent over 2005. The annual investment numbers grew even more in the following years, but 2006 was a turning point.

Around that time Kleiner Perkins had a plan to bet a third of its fund on cleantech investing. More than a decade ago, Kleiner made a fortune from investments like Google and Amazon, and in the early 2000′s was trying to find the next big thing. Some of the Valley’s most well-known investors like Draper Fisher Jurvetson and VantagePoint Capital Partners were also excited about cleantech back then, and had decided to put millions into Tesla, led by charismatic PayPal co-founder Elon Musk.

At some point at the very end of 2007, Kleiner became Fisker’s early flagship venture backer. Musk told PandoDaily’s Sarah Lacy last year that Kleiner actually tried to invest in Tesla before Fisker, during Tesla’s Series C round, but Musk said that Kleiner wouldn’t let him choose the Kleiner Partner for the board seat. Musk wanted John Doerr, but Kleiner’s transportation guy at the time was Lane, who later joined the board of Fisker. Musk ended up going with VantagePoint, and Kleiner ended up funding Fisker. Clearly Tesla’s VC funding, followed by its IPO in the summer of 2010, were significant motivators for Fisker’s investors.

Tesla’s Roadster, with VC-backing, was first delivered to customers in Feb 2008.

In early 2007, after a chance encounter with the girlfriend of then-Quantum Technologies CEO Alan Niedzwiecki, Henrik Fisker and Niedzwiecki decided to meet for lunch to discuss the possibility of launching an electric car based on the Quantum drivetrain. In late Summer of that year, Fisker Automotive was officially born as a joint venture between Fisker Coachbuild and Quantum.

The idea at the time was ambitious, exciting, and perhaps even a little threatening to potential competitors. A little over a year after Henrik Fisker did design work for Musk’s company, Tesla sued Fisker (Jalopnik called it the world’s most expensive girl fight) for breach of contract and allegedly using the design work to raise funds from venture capitalists and launch a company. The suit went to arbitration, and the arbitrator sided with Fisker.

The heart of Fisker’s business model was in that early deal with Quantum. The idea was to design a gorgeous car, and have suppliers like Quantum provide the technology because off-the-shelf parts from suppliers would help keep costs down.

But there were problems with this strategy: Sometimes, those parts had to be custom-made to fit the design vision, which resulted in higher prices for Fisker. Other times, parts were delivered late or, worse, faulty, but Fisker was locked in to those supplier relationships. Sources close to Fisker have also said that many of the parts were owned by the suppliers themselves, so Fisker didn’t own a lot of the internal technology.

Compare that approach with Tesla‘s strategy: Tesla has invested millions of dollars to amass electric car intellectual property. It can make money selling its core technology to other large auto makers like Toyota and Daimler, and a decent amount of Tesla’s value is in its tech IP.

Toyota’s electric RAV-4 has Tesla tech inside.

Indeed, Fisker’s business model wasn’t the type that funders in the Valley typically like — it’s the polar opposite of the ‘Intel inside’ approach. That so many investors were so eager to back the company has left many in the electric car and tech industries scratching their heads over the years. “It would have only taken a couple a phone calls to industry veterans to have prevented all of this,” says electric car advocate Chelsea Sexton, adding “there’s no excuse for not doing homework. It appears none was done.”

Fast forward to the end of 2012, when Fisker was desperately searching for a lifeline to help it survive, and was bidding itself to Chinese auto giants. Media reports have said, and I’ve heard as well, that the Chinese firms were partly scared off after they took a look under the hood and found that Fisker didn’t own much of its own technology.

Funding an electric car startup from scratch

One of the things Fisker will be most remembered for is the huge amount of capital it tapped into — the at least $1.2 billion it raised and the close to $200 million loan it received from the government.

When Fisker first showed off the Karma at the Detroit Auto Show in January 2008, Kleiner Perkins investors were front and center. Lane told the Wall Street Journal that their early investment in Fisker was more than $10 million and was one of the firm’s bigger investments at the time. Lane also said that the Fisker deal was one of the first in which former Vice President and Kleiner advisor Al Gore provided advice.

But those funds were just the initial drop in the bucket for what Fisker would ask for to grow and produce its cars. In the following years, Fisker raised venture rounds of around $65 million and $86 million. But venture firms couldn’t supply all of the funds for building an electric car, which can cost a billion dollars.

Part of the answer came from the U.S. government. When President Obama took office in 2009, he pledged to support electric cars and low-emission vehicles. His administration used the massive stimulus package to create green jobs and build a so-called clean energy economy. But even before that, a program called the Advanced Technology Vehicles Manufacturing, or ATVM, was created in 2007 and funded by Congress in 2008 and offered loans for companies making vehicles in the U.S. that had better mileage or reduced dependency on foreign oil.

In the summer of 2009, the first wave of ATVM conditional loans were announced, and went to Nissan, Ford and Tesla. Soon after, Fisker itself got approval for a conditional loan of $529 million. Fisker’s goal at that time was to produce 11,000 to 15,000 Karmas per year by September 2011, and 75,000 to 100,000 Project Ninas (later called the Atlantic) in 2012. The DOE ended up only delivering about $200 million of that loan after Fisker didn’t meet milestones for its Karma. Fisker delivered none of its Ninas, later called the Atlantic.

Much of the political reporting that will come out on Fisker, as well as a planned upcoming hearing on April 24, will likely focus on how Fisker got approval from the DOE. Was there cronysim, and did Gore play a role? In the past I’ve looked into rumors suggesting Fisker got the loan because it agreed to build a factory in Vice President Joe Biden’s home state and deliver Delaware green jobs. I’ve never found a direct connection there.

But I would imagine that, as with Solyndra, the DOE and the administration trusted the company’s backers and liked the idea of a beautifully designed, American-made electric car. Fisker fit into their thesis of using public funds to stimulate the clean-energy economy and create green jobs.

Joe Biden speaking at Solyndra’s ground breaking in August 2010

The broker

Getting the conditional loan was a key turning point for Fisker. It gave the company clout and the ability to raise additional funds. Soon after Fisker received the loan agreement, it started working more closely with a broker in Chicago called Advanced Equities.

Over the course of three years, according to my sources, brokers at Advanced Equities raised somewhere between $600 million and $800 million of Fisker’s over $1 billion in funding. The sources say Advanced Equities sold Fisker shares to over a thousand wealthy individuals. These aren’t professional investors that are used to taking on startup risk; they are people who did well in life and wanted to invest in the tech-driven dream of a sleek electric car.

One of those investors was DiCaprio, and numerous sources close to the company have told me that Kleiner Perkins partners Doerr and Lane put millions of dollars of their own money into Fisker. Another person that Fisker listed as a Director on a funding filing in late 2011 was Timothy Shriver. In a recorded internal sales call with Advanced Equity brokers from early 2010 that we’ve obtained, Advanced Equities co-founders tell their brokers that the Fisker opportunity is such a good one that they should bring the deal to their best customers.

Of course, many of the investors through Advanced Equities weren’t household names in San Francisco or Los Angeles. Chicago’s prepaid college saving’s fund, the Illinois Student Assistance Commission, invested $10 million. An investor named Daniel Wray invested $210,000, and later sued the company and its broker.

Fisker’s venture backers commonly pitched in to help Advanced Equities. Sources tell me that it wasn’t unusual for investment calls with Advanced Equities and potential investors to feature Kleiner’s Lane, as well as NEA’s Scott Sandell, sharing Fisker’s vision.

If you asked venture capitalists in the Valley around that time what they thought about Advanced Equities, a common response was that it didn’t have a very good reputation — “snake oil salesmen” was the term often used. I’ve long wondered why Kleiner and NEA would actively work with a broker that had a weak reputation. Advanced Equities brokers, for their part, made millions of dollars in sales commissions from these deals.

It wasn’t until December 2011 and into 2012 that the more dubious efforts of Advanced Equities became clearer to Fisker’s hundreds of investors. The last few hundred million dollars of Advanced Equities’ fund raising for Fisker, starting with the D-1 round, was what brokers call “pay to play.” As Fisker was running into technical, delivery and political problems, its valuation was quickly declining. But the company still needed more money, so the brokers went back to its current investors and said: Unless you give this more, your current shares will be diluted and your preferred stock will be converted to common stock.

It was essentially a gun to their heads. This is why investor Wray sued Fisker in February 2012, alleging he was on the receiving end of this tactic. In his lawsuit, he says Advanced Equities sent him a letter dated Jan. 18, 2012, stating that he needed to decide if he wanted to invest in Fisker’s next round, and pay around $84,000 by Jan. 27, 2012 — a little over a week from receiving the letter. He also says that Advanced Equities assured him that he would have anti-dilution protection. According to the audio clip from Advanced Equities’ internal sales call in early 2010, Advanced Equity leaders say that the Fisker deal will “suffer no dilution,” and was “a dream scenario.”

That dream would soon end. In September 2012 after Fisker closed on $1.2 billion in funding, the bulk of it organized by Advanced Equities, the SEC charged the broker with misleading investors when it raised money for another company back in 2009 and 2010 (Bloom Energy). Advanced settled, agreeing to pay $1 million, and its co-founders were personally fined. Two months later Advanced Equities closed up shop.

The public problems start

In the summer of 2011, Fisker cars finally start rolling off the production line — Lane got one of the first, and so did DiCaprio, Gore and other luminaries. By October, Fisker said about 40 Karmas had been shipped to the U.S. from the factory in Finland, and before the year was out, at least 200 people had Karmas.

But this was still a lower number than expected — delayed regulatory approval was part of the problem. As a result of the delays, Fisker’s battery supplier, A123 Systems, had to lower its yearly revenue guidance.

Ray Lane’s Fisker Karma, Summer 2011

At the end of the year, a dark cloud appeared over Fisker’s celebrity parade. In December, 239 Fiskers were recalled because of a faulty battery hose clamp. The news was alarming, but Tesla had faced the same type of recalls in its early days, and so customers and the media were somewhat forgiving.

Then another red flag: As the ball dropped on 2011, I noticed that Fisker was quietly raising more money using Advanced Equities. That seemed unusual because the company was now delivering its cars, meaning it could bring in revenue, and it had already raised so much. It would take another month for me to figure out why.

Fisker in February 2012 confirmed media reports that its DOE loan had been frozen after $192 million because it hadn’t hit the milestones with its Karma. The last payment Fisker had received was all the way back in May 2011. Many of Fisker’s investors are now wondering why the DOE wasn’t more vocal about the frozen loan when it happened back then, as they had continued to fund the company based on the assumption that the DOE loan was still moving forward.

Regardless, the confirmation of the frozen loan kicked off one of the worst years — both self-inflicted and just plain bad luck — for a startup I have ever seen.

Founder Henrik Fisker stepped down as CEO, and he was replaced by an auto executive from Chrysler. Six months later that executive was replaced by a third CEO, who previously worked on the Volt at GM. Fisker stopped work on its second car and laid off all the workers in its Delaware factory. (When this story was published, the DOE still has a note on its ATVM page saying Fisker created 2,000 permanent jobs in Wilmington, Del.)

In the spring of 2012, Consumer Reports bought a Karma, and when it broke down after less than 200 miles, the magazine understandably gave it one of the worst reviews in automotive history. One of the problems with the Consumer Reports’ test car involved the battery. But the battery issue turned out to be much more widespread that just the review car, and Fisker’s battery supplier decided to replace faulty battery cells to the tune of $55 million.

Later that year, A123 Systems itself went bankrupt, causing more problems for Fisker. Fisker claimed that A123 Systems owed it $140 million, but a bankruptcy settlement reduced that to a paltry $15 million. Chinese giant Wanxiang wound up buying A123 Systems; adding insult to injury for Fisker, sources have told me that Wanxiang also looked at, but seems to have passed on investing in or buying the electric car company.

That summer, Fisker also recalled a cooling fan after it caused a slow-burning fire in a Karma in Woodside, Calif. Watch the disturbing video of a fireman putting out the flames. In hindsight, Fisker is lucky no one was killed while driving its vehicles.

Then there was the just plain terrible luck for the ironically named Karma: Super Storm Sandy wiped out 338 of its Karmas in storage in New Jersey. The cars first drowned, and then caught on fire — salt water damage caused a short circuit that was spread to other cars by high winds, Fisker said at the time.

With all of this happening in public — and in a presidential election year — Fisker’s struggles became highly politicized. The company was mentioned numerous times in presidential debates and speeches leading up to the election. Republican nominee Romney called Fisker and other DOE-supported companies losers.

Where did all the money go?

Fisker had a phenomenal amount of funding in its coffers — so where did all the money go? It’s no doubt expensive to launch a car company, but the way Fisker spent the money didn’t seem to create much lasting value.

The company didn’t seem to invest substantially in technology innovation or tech IP, and seemed to spend a disproportionate amount on suppliers. For example, numerous sources have told me that the company paid upfront for 15,000 of some of the parts for its planned 15,000 Karmas. It ended up only selling around 2,000 of the cars. I’ve also heard that Fisker paid some funds upfront to have BMW make engines for the 100,000 Nina cars it hoped to produce — in the end, Fisker didn’t deliver a single Nina.

Costs to build each Karma also creeped up because the company missed its volume targets, and because engineering had to change designs around supplier constraints. No wonder the company ended up adding $20,000 to its initial sale price.

Expensive hires may also have sucked away chunks of Fisker’s funding: Sources I’ve talked to say that Fisker filled the upper levels of the company with seasoned auto executives from Detroit. At the high point of Fisker, the company had around 300 employees, plus dozens of contract staff. Bringing in a certain amount of the old guard could help a car startup ramp up quickly, and also impress potential investors with “industry names.” But those people are also used to big auto-industry budgets that included extensive travel and salaries — that’s the opposite life of a tech startup.

The end

The bottom line for Fisker: It sucked down over a billion dollars and delivered around 2,000 cars to customers that now have few places to turn if those cars have mechanical problems.

At Kleiner Perkins, the dust is still settling. Reuters reported earlier this year that Kleiner partner Doerr apologized to his limited partners (groups that put money into VC funds) for a weak fund performance and promised to do better in the future. Lane has transitioned away from bringing in new investments for Kleiner’s future fund. Spooked by bad deals, venture firms across the board pulled back on cleantech investing by a third in 2012.

There are political repercussions, too. The DOE was on the hot seat when Solyndra went bankrupt, and now will be equally under scrutiny over Fisker. The ATVM program has essentially been frozen, and the DOE says that despite the fact that it has $16.6 billion remaining in the fund and seven applications pending, it will not award any more loans.

The worst part of the Fisker story could be the fallout for electric cars. Helping reduce America’s dependence on foreign oil and lowering the carbon emissions of personal transportation is necessary. Introducing more electric cars is one way to do that. But with the industry in such a fragile, nascent stage, Fisker could wind up delivering the knock-out blow.

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Ignited says it provided Fisker with creative services, advertising, web design, and creative and media buying services. Along with the lawsuit from Fisker’s landlord, the company was also served a class action lawsuit for laying off 75 percent of its workforce, and allegedly not giving the former employees 60 days notice (which would violate the WARN Act). So that’s three lawsuits filed against Fisker this month, and I have a hunch there’ll be more coming.

Fisker appears to be close to bankruptcy and according to Reuters last week, the company hired a firm to look into bankruptcy, and could file at any time. Fisker’s founders have also been asked to attend a hearing on April 24 in Washington D.C., organized by House Republicans. Fisker drew down on close to $200 million in a government loan from the Advanced Technology Vehicle Manufacturing Program.

Fisker raised at least $1.2 billion in funds over the company’s five and half year lifetime. Fisker was backed by venture firms Kleiner Perkins (Ray Lane was a board member) and NEA, and worked with now-defunct broker Advanced Equities.

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Some HP board members stuck to their guns in the face of shareholder discontent. Three weeks ago, Rajiv Gupta told Reuters: ”Losing some of our directors in an abrupt and disorderly manner could undermine our efforts to stabilize the company … What the company needs now is stability and consistency of leadership so that the Board and the management team can devote all of their focus and energy towards executing on our strategic plan.”

 So much for that. By now, it’s apparent that  some of those challenges resonated. Directors John H. Hammergren and G. Kennedy Thompson have decided to leave the board, leaving two slots open for HP to fill. Both directors will continue to serve until the May board meeting, according to the release. Many have blamed HP’s myriad troubles on its inept board, including the CtW Investment Group, an arm of labor federation Change to Win that filed a letter in February asking for Lane to be removed as chairman. The group blamed the retiring directors and Lane for the debacle that is the Autonomy purchase.

Cleaning house might be the first step to getting the company back on track after what has been a tumultuous couple of years since the company deposed Mark Hurd as CEO and Chairman in 2010 after a sexual harassment scandal. Lane’s tenure has been rocky to say the least. He came on as chairman at the same time as former SAP CEO Leo Apotheker was named CEO and presided over the company’s problematic — and extremely expensive — acquisition of Autonomy for more than $13 billion.

That acquisition — which was Apotheker’s baby but got board approval —  raised eyebrows even at the time it was announced with many observers calling Autonomy wildly over priced. That assessment turns out to have been true. HP subsequently wrote off  more than $8 billion of that purchase and pushed U.S. and U.K authorities to investigate alleged fraud on the part of former Autonomy management. The fact that the purchase passed muster in the first place though focused more eyes on HP’s board.

In a release announcing his move on Thursday Lane said:

“After reflecting on the stockholder vote last month, I’ve decided to step down as executive chairman to reduce any distraction from HP’s ongoing turnaround,” said Lane. “Since I joined HP’s board a little over two years ago, I’ve been committed to board evolution to ensure our turnaround and future success. I’m proud of the board we’ve built and the progress we’ve made to date in restoring the company. I will continue to serve HP as a director and help finish the job.”

The one question some shareholders may have is why Lane, who is a partner emeritus at VC firm Kleiner Perkins Caufield & Buyers,  remains involved at HP at all.

HPQ data by YCharts

This post was updated at 11:15 a.m. PST with director comment.

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Eight-year-old Choose Energy has developed a service that offers consumers and businesses in deregulated markets options for retail electricity and gas plans. The site is active in Texas, New York, Ohio, Pennsylvania and Illinois, and the company says it will eventually work for the 19 deregulated energy states and 22 deregulated gas states.

While deregulated energy markets have proved to be controversial in some states in the past, as GigaOM Pro analyst Adam Lesser has written, further deregulation could also support business models in areas like smart grid analytics and clean power. It’s been more than a decade since the California electricity crisis and the Enron disaster.

Choose Energy says it is also building tools for retail energy providers to acquire customers based on techniques from telecom, travel, media and other web-heavy industries. The tools used by the cell phone companies to entice new customers to their network are much more sophisticated than what standard retail energy providers are using today. The startup says it has helped 100,000 consumers switch energy suppliers.

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Dell sweepstakes gets more interesting

Bloomberg News, which has been on top of this story from the get-go, now reports that the Blackstone Group made a tentative offer for Dell late Friday, in time for the midnight deadline. The Wall Street Journal subsequently posted that activist investor Icahn, who has a 6 percent stake in the PC-and-server maker,  is likewise making a bid. Both Blackstone and Icahn have been reportedly in the hunt for weeks. Icahn and others have said Dell is worth up to $20 per share.

None of the reports named their sources and none of the companies offered comment. A Dell spokesman had no comment.

Dell’s private equity backstory

Dell management has connections to both Blackstone and Silver Lake. Dave Johnson, who Dell poached from IBM in 2009 to head up its acquisitions strategy, left Dell for Blackstone in January. John Swainson, now president of Dell’s software group, consulted with Silver Lake  Partners.

As one former Dell exec said via email: “So there you have John Swainson, previously Silver Lake and currently at Dell and Dave Johnson previously at Dell, and currently at Blackstone.  Add Marius Haas previously KKR and now at Dell, and you have a pretty interesting PE clique there.” Haas is VP of Dell’s Enterprise Solutions group.

According to the Journal‘s sources, the entry of new bidders will extend Dell’s “go shop” period for another four days.

Mark Hurd? Seriously?

Adding more intrigue to the mix, Fortune reported last week that Blackstone Group might tap Mark Hurd, Oracle co-president, to lead Dell. That raised eyebrows. Hurd left Hewlett-Packard, where he was chairman and CEO, under a cloud of accusations about sexual harassment and misuse of company expense accounts.

HP rival Oracle then hired Hurd, presumably for his hardware expertise and possibly because Oracle CEO Larry Ellison wanted to taunt HP Chairman Ray Lane, a former Oracle president. That Dell, which competed tooth-and-nail with HP for PC and server market leadership, might be run by a former HP guy would be ironic.

It’s also not at all clear whether ownership by a private equity firm will right Dell’s course. It’s missed a lot of opportunity by being late or ineffectual in the mobile device and tablet market — areas where HP has also missed the mark.

Hurd is often mentioned as a successor to Ellison at Oracle. But the tech world is littered with former successors to Ellison who are now elsewhere. Just ask Charles Phillips or Tom Siebel or Gary Bloom or Marc Benioff. Or Lane. It’s by no means a certainty that Hurd will be any more successful and he may be looking for an out. Especially since, as one Wall Street analyst put it, Oracle’s promised hardware turnaround has failed to materialize.

DELL data by YCharts

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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”
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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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But the fall, when it came, was fast and relentless.

Less than a month after the deal was struck, its architect, HP boss Leo Apotheker, was on his way out, replaced by Meg Whitman. A few months later, Autonomy CEO Mike Lynch walked the plank too. And this week things exploded as Whitman announced an $8.8 billion writedown of the deal amid claims of fraud and misleading accounting that the SEC and FBI are investigating.

Whatever the realities of the deal — and Lynch vigorously denies Whitman’s claims — the damage has already been done. And it’s not just to Autonomy and HP, either.

Transatlantic tough times

Here’s one deep, abiding result of this debacle that shouldn’t be ignored: it’s likely to sour any future dealings between America’s technology giants and their European counterparts. What Silicon Valley CEO, faced with a potential acquisition of a British company, is not going to remember Meg Whitman’s claims? And what acquirer will not let the fear of being undone — just like Apotheker was — color their decisions?

For anyone skeptically minded, Autonomy underscores an unhappy trend for transatlantic technology deals. So many of the biggest European tech exits have ended in ignominy, or at the very least obscurity. MySQL was bought by Sun for $1 billion shortly before it went supernova and got snapped up by Oracle. In 2008, Microsoft spent $1.2 billion buying Norwegian search company Fast; a few months later the company was charged with fraud for violating accounting rules.

And then there’s Skype. Rightly paraded as one of the great European software success stories, it has a checkered history. Before it was bought by Microsoft for $8.5 billion, of course, it had been acquired and then jettisoned by eBay, which wrote its original bumper purchase price down by $1.4 billion.

Negative patterns are hard to shake, and in meeting rooms from San Jose up to San Francisco, you can bet anyone talking to a British entrepreneur about a possible buyout is going to think of Autonomy and this mess.

And yet, and yet. The story is so much more complex. After all, eBay’s troubled purchase of Skype happened under the leadership of… Meg Whitman. Sound familiar?

Meanwhile, the Autonomy buy wasn’t just Apotheker’s deal: it also took place on the watch of HP’s board — a hyper-connected, super-smart group of the Valley’s best and brightest. I’m not just talking about Whitman herself, but also Marc Andreessen, the man worshipped by many as the new leader of the pack. Then there’s Ray Lane of KPCB, once a bright star now having his role reduced, and Alcatel-Lucent’s Patricia Russo — who, as the head of a French-American firm, has particular experience of the European-American situation. Let’s hope pressure continues on those individuals to see why they got things so very wrong.

Truth is, attempting to draw lessons from HP-Autonomy doesn’t get you far. The British company may be tarnished by the accusations, but HP is a mess, switching from one disastrous strategy to another without understanding what is happening to it. And because it’s impossible to separate the misinformed decisions from the bad ones, coming to a broader conclusion about how fit European technology companies really are would be terrible. Each deal should be looked at on its own merits, not in some gigantic cultural context stuffed with lies, fraud and unproven accusations.

Yet we know human nature, and we know it is a fickle, arbitrary thing. What a shame for everyone.

Meg Whitman photo courtesy of Shutterstock user drserg

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Fortune’s Dan Primack first reported last month that Kleiner has been making a transition in the partnership structure, including transitioning these two to focus on current investments, instead of leading new investments. Kleiner partner Brook Byers is also not named as a general partner on this new fund.

Kleiner notes that it will still be investing in cleantech in the new fund, but also points out that a further emphasis on digital will be made in the fund, and highlights new hires with expertise in mobile, social and cloud, including Mike Abbott, Bing Gordon and Mary Meeker. While Kleiner continues to say that it will still invest in cleantech, it seems like the firm isn’t placing the same emphasis on it as before.

There’s been a lack of successful cleantech exits for Kleiner to date to be sure. In recent weeks Luca Technologies pulled its IPO plans, and Silver Spring Network’s IPO has yet to come through. Electric car maker Fisker Automotive has continued to struggle for various reasons. Only solar inverter company Enphase Energy managed to make it out in March.

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The move seems to have been happening for awhile. Both DFJ partners Raj Atluru and Josh Raffaelli left DFJ months ago to join Silver Lake Kraftwerk and it doesn’t seem like they were ever replaced. DFJ’s managing director Don Wood told VentureWire that the deal flow “perhaps has shifted somewhat toward mobile, cloud and consumer web of late.”

Yet despite the reported (and yes, clear) shift, DFJ still seems to have made a few clean power bets this year. According to the Cleantech Group, DFJ was the most active investor in greentech in the first quarter of this year, with investments in companies including Solar Junction, Intematix, SCIenergy, Shanghai Dajun Technologies, Pentalum Technologies, Oasys Water, ēssess, Aveillant and Jing-Jin Electric (JJE).

Other VCs that have led investments in greentech companies over the years have also seemed to have waned on greentech. Both Kleiner’s Ray Lane and Bill Joy, who were greentech champions, weren’t named as general partners on Kleiner Perkins’ next fund. So basically they will continue to take care of their current investments, but they won’t go out looking for new ones for the next fund. While Kleiner says it’s not changing its strategy away from greentech, its actions seem to suggest that it is.

As Bill Gates has said, it’s still unclear how we’re going to reward the energy entrepreneur — which is worrisome.

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