Thursday, February 01, 2007

VCs in Washington D.C.

From : Tech Barons Take on New Project

Excerpts :

The venture capitalists say that their research and lobbying helped with the creation and passage of a California bill that Gov. Arnold Schwarzenegger signed into law in September, capping the state’s greenhouse gas emissions at 1990 levels by 2020.

When it comes to supporting alternative energy sources, the venture capitalists are backing up their words with money. In 2006, venture capitalists put $727 million into 39 alternative energy start-ups, compared with $195 million in 18 such firms for 2005, according to the National Venture Capital Association.

More than a third of the 2006 investments went to technologies related to ethanol, a gasoline alternative that is made from corn and other plant material. Mr. Bush has high hopes for ethanol and other alternative fuels, calling for them to take the place of 35 billion gallons of gasoline by 2017.

One venture-backed ethanol start-up is Altra, a 50-employee company based in Los Angeles. It offers a twist on ethanol production by making the fuel from nonedible plant matter, producing what is known as cellulosic ethanol. Kleiner Perkins Caufield and Byers invested an undisclosed amount in Altra as part of a financing round that raised $50 million, Altra said.

Mr. Denniston, a partner at the Silicon Valley investment firm Kleiner Perkins Caufield and Byers, said Altra could benefit from policy changes. For example, the government could require that cars be able to run on either ethanol or gasoline, or it could set up a national carbon trading system that would increase demand for ethanol by forcing companies to find greener alternatives to oil and gas. Such a system would put a limit on the volume of carbon dioxide emissions and then create a trading system where companies could buy credits that would permit them to emit more.

Mr. Denniston also wants to see a change to the so-called blender’s credit, a 51-cents-a-gallon subsidy that goes to the company that mixes gasoline with ethanol, typically one of the major gas companies. He would like that money to go to producers like Altra. And he wants the subsidy to rise when the price of oil falls, or drop when oil prices rise.

Kleiner Perkins has formed the Greentech Innovation Network to bring together entrepreneurs, scientists, academics and policy makers. The National Venture Capital Association has a committee focused on energy policies.

In September Vinod Khosla put together a 19-page paper calling for new energy policies — from mandating that 10 percent of gas stations have at least one ethanol pump to requiring that 70 percent of new cars sold in the United States by 2010 be able to use more than one type of fuel.


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