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'Ag' Man turned VC spots hottest space for cleantech
Amol Deshpande discusses hot sectors in cleantech, December, 2009
by Mary Duan (Houston Business Journal)
Where some see waste, Amol Deshpande sees opportunity. An entrepreneur in his own right, Deshpande once worked on behalf of “big ag” but now looks to help grow companies in a different way. He seeks out renewable energy, water tech and waste tech startups as a junior partner at the marquis venture firm Kleiner Perkins Caufield & Byers.
Since joining the VC firm in April 2008, Deshpande has become a board observer to two cleantech companies — Hara Software Inc. and Luca Technologies Inc. — and invested in two other companies. One is a water company still in stealth mode; the other is Harvest Power, a Massachusetts-based company Deshpande incubated at Kleiner Perkins along with co-founder Paul Sellew, a veteran of the organic waste industry.
Deshpande wouldn’t talk about Kleiner Perkins’ investment philosophy as a whole, but in general, he believes that cleantech from the VC perspective will move to more capital efficiency, or toward businesses that can demonstrate proof of concept. This means a startup can move beyond the lab environment and get to market quicker without the need to raise large amounts of capital.
“It doesn’t need to be totally commercial proof, but it has to be ready for scale up, and you can invest in it and get it to that point without significant sums of money,” he said.
He added that VCs are taking a greater interest in emerging markets with acute problems, such as water, as opposed to traditionally popular investments such as supply-side renewable energy investments.
Since its founding in 1972, Kleiner Perkins has backed entrepreneurs in more than 600 ventures. In May 2008, the firm launched a $700 million fund aimed in part at cleantech, and it also announced the launch of a $500 million green growth fund, aimed at speeding mass market adoption of solutions to the world’s climate crisis.
Agriculture background
Prior to joining Kleiner Perkins, the 31-year-old Deshpande spent three years as a director at Black River Asset Management LLC, an investment subsidiary of agribusiness giant Cargill Inc. He was involved with multiple green tech investments and initiatives, including solar, next generation fuels, sustainable agriculture, industrial biotech, waste technology and carbon markets.
Deshpande, a chemical engineer by trade, also founded the ag-biotech company Ophios, focused on novel germplasm in high value vegetable crops, specifically garlic. That company is moving toward commercialization of a product that looks like a scallion but tastes like garlic.
“I had spent my whole career working in cleantech, but I never had much experience in what happened in Silicon Valley in the past two decades,” Deshpande said. “But I always had an interest in the physical world and technology and in making products.”
Deshpande joined the firm just as the economy was tanking and venture firms were slamming the brakes on investments, but he has found the economy has little impact on entrepreneurship.
“I’m still taking meetings on a daily basis because we’re seeing great ideas, and we look for the same things we always look for — entrepreneurs with courage, entrepreneurs who have a vision and who are interested in the same things but can teach me something,” Deshpande said.
Amit Chatterjee, CEO and founder of Hara Software, a maker of on-demand environmental and energy-management software, has developed a relationship with Deshpande, who has a role as a Hara board observer.
Chatterjee said when it comes to the carbon market, Deshpande is one of the most knowledgeable VCs he’s met and has helped Hara develop carbon strategies, service delivery strategies and help think through ways to serve Hara’s customers.
“He’s in the top 5 percent of VCs in his knowledge of cleantech, and he can put his knowledge in context to the broader meaning of alternative energy” Chatterjee said. “He brings a very unique skill set to the table.”
Deshpande’s focus in agribusiness was on biosubstitution in particular, such as making plastics from sugars or vegetable oils; the intersection of biofuels and biosubstitution; and the stress that agriculture places on the water system.
Joining Kleiner Perkins
Deshpande was introduced to the inner workings of the VC firm when Kleiner Perkins investors Ray Lane and Ajit Nazare were performing due diligence on a Cargill company. While the VC firm didn’t invest in the company, the VCs knew they wanted to make an investment in Deshpande.
Lane, who prior to joining Kleiner Perkins was president and chief operating officer at Oracle Corp., said Deshpande thinks about a business in a CEO’s shoes.
“Most people in investment look at business as a spreadsheet and a financial model, but he looks at it as a real business and what it’s going to take to make it happen,” Lane said. “He sets a goal, whatever the metric may be, and that becomes the driving force. He’s a very serious guy and very driven to get results.”
Lane said junior partners are encouraged to take time to learn and not go to the boards too quickly, and now well into his second year at Kleiner Perkins, Deshpande has a number of opportunities lined up.
“Junior people want to find opportunities and bring them to the firm, and he does that in spades. He’s probably working on six or seven things at once, “ Lane said. “I like working with him, and I can help him with the things that need someone with gray hair.”
Deshpande said he tries “to stick to my knitting” in terms of companies that will catch his attention, focusing on the areas that launched his career — biosubstitution, water and waste. What comes after that is what he thrives on.
“Success can be measured in different ways, but I think it starts with building a great team,” he said. “Entrepreneurs have a lot of courage, and I don’t look at an end result as just financial success. It all starts with the team.”
