By Sonia Kolesnikov-Jessop
Published: October 31, 2008
SINGAPORE: On an average day, Ford Tamer receives six to seven proposals inviting him to invest in all sorts of green technology projects. "We do get approached a lot," said Tamer, a venture capitalist and operating partner at Khosla Ventures. "There is definitely no shortage of renewal-energy plans; if anything, there is an increase in the number of plans we're seeing."
Khosla Ventures, started in 2004 in Silicon Valley by Vinod Khosla, co-founder of Sun Microsystems, has quickly become one of the top venture capital firms investing in clean technology. It has already put money into more than 70 companies, and Tamer, who joined the firm in September 2007, said he was mostly looking at mechanical and electrical efficiency, solar energy and information technology services.
So far, he has provided seed money to nine companies, including EcoMotors, which is developing a fuel-efficient diesel engine; Kaai and Soraa, companies that focus on laser development; and Topanga, a lighting company.
"But we've done the math; and for these nine companies, we probably received 1,000 plans, looked at 500 of them, selected to meet over 100 and did detailed due diligence on 20," he said on a trip to Singapore in September.
Though most of his firm's investments have been in the United States, Tamer said Khosla Ventures, which is based in Menlo Park, California, was now looking to invest internationally.
Published: October 31, 2008
SINGAPORE: On an average day, Ford Tamer receives six to seven proposals inviting him to invest in all sorts of green technology projects. "We do get approached a lot," said Tamer, a venture capitalist and operating partner at Khosla Ventures. "There is definitely no shortage of renewal-energy plans; if anything, there is an increase in the number of plans we're seeing."
Khosla Ventures, started in 2004 in Silicon Valley by Vinod Khosla, co-founder of Sun Microsystems, has quickly become one of the top venture capital firms investing in clean technology. It has already put money into more than 70 companies, and Tamer, who joined the firm in September 2007, said he was mostly looking at mechanical and electrical efficiency, solar energy and information technology services.
So far, he has provided seed money to nine companies, including EcoMotors, which is developing a fuel-efficient diesel engine; Kaai and Soraa, companies that focus on laser development; and Topanga, a lighting company.
"But we've done the math; and for these nine companies, we probably received 1,000 plans, looked at 500 of them, selected to meet over 100 and did detailed due diligence on 20," he said on a trip to Singapore in September.
Though most of his firm's investments have been in the United States, Tamer said Khosla Ventures, which is based in Menlo Park, California, was now looking to invest internationally.
"One of my goals being here is to start identifying and making more contacts," Tamer said. "We're going to want to do more in India and China because the end markets there are pretty large, and having a locally based company that can take advantage of those markets would be good. We've invested in one company in India and are looking to do more there."
According to Cleantech Group, a research firm that tracks investments in environmental energy, venture capital firms invested $2.6 billion in the sector in the third quarter of this year, an all-time record and a 37 percent increase from a year earlier. U.S. companies received $1.75 billion in the quarter, while the European tally was $742 million and Chinese companies raised $111 million.
Khosla Ventures was one of the top five investors for the quarter, according to Brian Fan, senior director of research at Cleantech. "Khosla has a systematic approach to investing that is focused on the following strategies: replace oil, replace coal and increase the efficiency of materials, machines, electrical devices and electrical transmission," Fan said. "Khosla's portfolio reflects these strategies, as he has invested in biofuels, solar, geothermal, smart grid, lighting, engine and materials companies."
As the turmoil in financial markets intensified in October, Tamer said in an e-mail exchange that sustained financing for projects would "naturally be tougher and more expensive."
"We've been very proactive in reviewing our portfolio companies' strategies and quickly reducing operating expenses where needed," he said, "This has been my life for the past three weeks."
But with venture capital's enthusiasm for environmentally friendly technologies still intact, Tamer worries about some of the valuations in the sector.
"This year, solar thin film has been very hot, with billion-dollar valuations for low-efficiency PV solutions," he said in September, referring to photovoltaic cells. "We've instead maintained valuation discipline, and invested in high-efficiency PV and solar-thermal which make more sense."
He added, "The concern is that if there is a solar bubble and investors lose money, it could put a break on investment in the sector, which wouldn't help anybody."
Fan, the Cleantech executive, calculated that thin-film solar start-ups raised $620 million in the third quarter, with companies focusing on copper-indium-gallium-selenide, or CIGS, technology for panels attracting the bulk of these funds. They include SoloPower, which raised $200 million, and OptiSolar, at $78 million. Sulfurcell Solartechnik, a German company specializing in copper-indium-sulfide, or CIS, technology for panels, raised $134 million.
Tamer, who was born in Lebanon and educated in the United States, has spent most of his professional career at the receiving end of venture capital funds, having started several technology companies from the ground up.
While obtaining a doctorate degree in engineering at the Massachusetts Institute of Technology, he set up his first company, a provider of artificial intelligence tools, with two partners and some seed money. The company, MegaKnowledge, was sold to IntelliCorp in 1990 for $6 million.
Tamer stayed on for four years before leaving to help set up Dazel, a company that managed business planning systems. He led the marketing and international operations at the company, which was later bought by Hewlett-Packard for $150 million.
In 1998, he co-founded Agere, a provider of network processors, and served as its chief executive until it was acquired by Lucent Microelectronics in 2000 for $430 million. He stayed with the company for a couple of years before switching to another semiconductor manufacturer, Broadcom, where he headed the networking business group, expanding it into a $1.2 billion business.
According to Cleantech Group, a research firm that tracks investments in environmental energy, venture capital firms invested $2.6 billion in the sector in the third quarter of this year, an all-time record and a 37 percent increase from a year earlier. U.S. companies received $1.75 billion in the quarter, while the European tally was $742 million and Chinese companies raised $111 million.
Khosla Ventures was one of the top five investors for the quarter, according to Brian Fan, senior director of research at Cleantech. "Khosla has a systematic approach to investing that is focused on the following strategies: replace oil, replace coal and increase the efficiency of materials, machines, electrical devices and electrical transmission," Fan said. "Khosla's portfolio reflects these strategies, as he has invested in biofuels, solar, geothermal, smart grid, lighting, engine and materials companies."
As the turmoil in financial markets intensified in October, Tamer said in an e-mail exchange that sustained financing for projects would "naturally be tougher and more expensive."
"We've been very proactive in reviewing our portfolio companies' strategies and quickly reducing operating expenses where needed," he said, "This has been my life for the past three weeks."
But with venture capital's enthusiasm for environmentally friendly technologies still intact, Tamer worries about some of the valuations in the sector.
"This year, solar thin film has been very hot, with billion-dollar valuations for low-efficiency PV solutions," he said in September, referring to photovoltaic cells. "We've instead maintained valuation discipline, and invested in high-efficiency PV and solar-thermal which make more sense."
He added, "The concern is that if there is a solar bubble and investors lose money, it could put a break on investment in the sector, which wouldn't help anybody."
Fan, the Cleantech executive, calculated that thin-film solar start-ups raised $620 million in the third quarter, with companies focusing on copper-indium-gallium-selenide, or CIGS, technology for panels attracting the bulk of these funds. They include SoloPower, which raised $200 million, and OptiSolar, at $78 million. Sulfurcell Solartechnik, a German company specializing in copper-indium-sulfide, or CIS, technology for panels, raised $134 million.
Tamer, who was born in Lebanon and educated in the United States, has spent most of his professional career at the receiving end of venture capital funds, having started several technology companies from the ground up.
While obtaining a doctorate degree in engineering at the Massachusetts Institute of Technology, he set up his first company, a provider of artificial intelligence tools, with two partners and some seed money. The company, MegaKnowledge, was sold to IntelliCorp in 1990 for $6 million.
Tamer stayed on for four years before leaving to help set up Dazel, a company that managed business planning systems. He led the marketing and international operations at the company, which was later bought by Hewlett-Packard for $150 million.
In 1998, he co-founded Agere, a provider of network processors, and served as its chief executive until it was acquired by Lucent Microelectronics in 2000 for $430 million. He stayed with the company for a couple of years before switching to another semiconductor manufacturer, Broadcom, where he headed the networking business group, expanding it into a $1.2 billion business.
Tamer met Khosla when the two were on the board of eASIC, a semiconductor company. After hearing Khosla talk passionately about solar-thermal energy and biofuels, Tamer decided to join Khosla's firm "and sort of go on the other side."
Tamer said that while he enjoyed the opportunity of being able to contribute more effectively to the development of clean technologies, he needed to learn to be patient.
"You're not the quarterback anymore, you're the coach, and you must make the transition, and it's a big one," he said. "I'm told it takes a couple of years to let go of the urge to do it yourself."
Tamer said that while he enjoyed the opportunity of being able to contribute more effectively to the development of clean technologies, he needed to learn to be patient.
"You're not the quarterback anymore, you're the coach, and you must make the transition, and it's a big one," he said. "I'm told it takes a couple of years to let go of the urge to do it yourself."
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