Venture capitalist John Doerr made his name and fortune with early investments in Netscape Communications Corp., Amazon.com Inc., Google Inc. and other pioneering tech firms that went from scrappy startups to household names.
Now Doerr and his firm, Kleiner Perkins Caulfield & Byers, are placing big bets on an emerging sector he calls "green technology," one he believes could become as lucrative as information technology and biotechnology.
Menlo Park-based Kleiner Perkins plans to set aside $100 million of its latest $600 million fund for technologies that help provide cleaner energy, transportation, air and water. That's on top of more than $50 million Kleiner Perkins had already invested in seven greentech ventures.
"This field of greentech could be the largest economic opportunity of the 21st century," Doerr said. "There's never been a better time than now to start or accelerate a greentech venture."
As one of Silicon Valley's most respected investors, Doerr's decision to champion green technology as the next big thing is generating buzz in the venture capital community.
"When John Doerr talks, people listen," said Mark Heesen, president of the National Venture Capital Association. "John appears to have an innate ability to spot trends and execute a business plan that is actually able to take advantage of those trends."
Kleiner Perkins' plan to ramp up investment in green technology is just the latest sign of the sector's growth.
North American venture capitalists invested more than $1.6 billion in cleantech companies last year, a 35 percent increase over 2004, according to a report by the Cleantech Venture Network, a trade group.
"It's a strong area for venture capital," said Craig Cuddebach, the network's senior vice president, whose group expects venture capital investment in the sector to double over the next three years. "It's no longer a choice between whether you will be clean or profitable."
Also known as clean technology, the field includes technologies related to water purification, air quality, nanotechnology, alternative fuels, manufacturing, recycling and renewable energy.
As prices of more traditional energy sources continue to rise, the global market for clean energy sources such as biofuels, hydrogen fuel cells and solar and wind energy rose to $40 billion last year, according to a report released last month by Clean Edge Inc., a Bay Area marketing firm. The figure is expected to more than quadruple to $167 billion by 2015, the report said.
Past investments in renewable energy and other clean technologies often resulted in disappointing returns, largely because the technologies and market demand weren't strong enough, Heesen said. Alternative energy firms must fight for their share of a market that's tightly regulated and dominated by the oil, coal and natural gas industries.
"There are a lot of obstacles that stand in the way of creating a new way of creating energy," Heesen said.
But investors are seeing better prospects as technologies advance, more seasoned entrepreneurs enter the field and cleantech companies generate higher revenue. Successful initial public offerings by cleantech companies, such as Sunnyvale, Calif.-based SunPower Corp. and China's SunTech Power, have also stoked investor interest.
Lobbying for government policies
Besides investing in greentech ventures, Doerr said he and Kleiner Perkins plan to "advocate for policies that reduce the climate crisis and increase energy innovation."
Vinod Khosla, a Kleiner Perkins associate who recently started his own venture capital firm, is financing a California ballot initiative to fund alternative energy initiatives through tax hikes on oil companies.
Venture capitalists point to the global forces driving greentech investment: the rising cost of fuel, the economic expansion of China, India and other Asian nations; and growing worries over global warming.
"In my opinion, it's one of the most pressing global challenges we face," Doerr said. "It's causing the nations of the world to put an even higher priority than we have now on innovation."
Doerr sees another major trend: billions of people moving to cities in developing countries. Experts predict the number of people living in "megacities" with more than 10 million people will triple from 2 billion to 6 billion over the next 50 years, he said.
"This is the mother of all markets," Doerr said. "As those Asian economies rise, people will move from rural to urban settings. All those people will want the same things that you and I want — clean water, power and transportation."