Getting into Forbes Midas List of VCs
Remember Vinod Khosla, co-founder of Sun Microsystems, ( now a Forbes Midas VC focusing on clean energy ventures thro Khosla Ventures ) amongst others ? The Silicon Valley venture capitalist who hit it big during the telecom boom in the 1990s, turned two years ago to embrace green technoloy. Everyone thought his outlandish bets on untested technologies such as celulosic ethanol - which most experts caution will be only be commercially viable in two years, at the earliest — would take some time to show results.
Vinod paid no heed to that advice and went straight ahead with his investments in the space and got rewarded handsomely. He knew it was an opportunity when he saw one in in Cambridge, Mass.-based Celunol last year as part of a $60 million venture capital round. Biotech company Diversa announced Monday it will acquire Celunol in a deal worth roughly $182.45 million. Cellulosic ethanol is a process that uses non-food plants and other waste to make ethanol, and it is much more efficient, and thus better for the environment, than regular corn-based ethanol.
Normal refrain of all VCs is that they are interested in funding Ventures where they have a clear domain expertise. Point taken. I had always argued that what separates a great VC from a good one is the level of their prescience in seizing an early opportunity and their deftness in moving along the vetting and mentoring processes including roadmap for execution to deliver a multi-bagger. With the first few hits and misses, the great one gets the picture right. Then it’s only a question of taking an early intelligent bet than having a direct domain expertise. They assess the strength of the idea, the management team and help the founders reinforce that team with outside talent drawn from wherever. That’s how they get into Midas list.
Vinod has done just that. He’s not been much on clean energy to begin with but has done his home work well before he took the plunge. Clearly the stuff VC legends are made of.
Vinod paid no heed to that advice and went straight ahead with his investments in the space and got rewarded handsomely. He knew it was an opportunity when he saw one in in Cambridge, Mass.-based Celunol last year as part of a $60 million venture capital round. Biotech company Diversa announced Monday it will acquire Celunol in a deal worth roughly $182.45 million. Cellulosic ethanol is a process that uses non-food plants and other waste to make ethanol, and it is much more efficient, and thus better for the environment, than regular corn-based ethanol.
Normal refrain of all VCs is that they are interested in funding Ventures where they have a clear domain expertise. Point taken. I had always argued that what separates a great VC from a good one is the level of their prescience in seizing an early opportunity and their deftness in moving along the vetting and mentoring processes including roadmap for execution to deliver a multi-bagger. With the first few hits and misses, the great one gets the picture right. Then it’s only a question of taking an early intelligent bet than having a direct domain expertise. They assess the strength of the idea, the management team and help the founders reinforce that team with outside talent drawn from wherever. That’s how they get into Midas list.
Vinod has done just that. He’s not been much on clean energy to begin with but has done his home work well before he took the plunge. Clearly the stuff VC legends are made of.
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Do you think other VCs can take a leaf out of this and make a difference ?
Labels: Clean Energy, Midas List, VC process, Vinod Khosla
posted by Krish @ 11:31 PM
1 Comments:
Hey Krish!!
Its been a while since you wrote this article but i m getting to read it today only. well, investments in clean tech in India is becoming a trend. though a lot of VCs would be interested in investing in promising green enterprises but the problem of the hour is the scarcity of such "investable" enerprises. I have just entered the field n i m sure its very long way to go for me b4 i can understand the business of VC. I m working for New Ventures India @ CII-Sohrabji Godrej Green Business centre, Hyderabad and we have Investor Forum'07 on 16-17th Nov'07 in Mumbai at Taj Lands End. The investors are excited but few enterprises are there so satiate them!!!
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