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Kleiner-Perkins Invests in Fisker; VC Firms Race to Invest in Plug-Ins says WSJ
Jan 14, 2008 (From the CalCars-News archive)
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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We've been watching the race among automakers shape up, and hearing about competition among batterymakers; this page 2 Wall Street Journal article looks at the trend for top venture capital firms to invest in plug-in hybrid and all-electric cars.

Electric-Car Firms Get Star Investors
January 14, 2008; Page A2­article/­SB120027887033287745.html

DETROIT -- The race to develop an electric car is heating up and drawing increasing interest from the same venture-capital investors who helped build Silicon Valley.

The latest entrant is expected to be announced today at the North American International Auto Show in Detroit when Fisker Automotive Inc. unveils an $80,000 battery-powered luxury car it aims to begin delivering in late 2009. The Fisker Karma, a so-called plug-in hybrid, can go 50 miles on electricity before a small gasoline engine kicks in to generate electricity to charge a lithium-ion battery pack on board. The company has backing from Kleiner Perkins Caufield & Byers, perhaps Silicon Valley's best-known venture-capital firm and a backer of household tech names such as Netscape Communications, Inc. and Google Inc.

The announcement comes at a show in which auto makers are scrambling to offer alternatives to traditional gasoline-fueled vehicles. Auto makers also announced plans for next-generation diesel-powered cars and efforts to develop more ethanol-based fuels. (See related article1.)

CAPTION: The Fisker Karma is a plug-in hybrid sports sedan set to begin delivery in late 2009.

The luxury-electric-car deal, finalized last week in Irvine, Calif., where Fisker Automotive is based, is one of the first deals in which former Vice President Al Gore provided advice for Kleiner, which Mr. Gore joined in November as a partner. Mr. Gore wasn't heavily involved in the Fisker deal, although "he wants to order" a car, said Kleiner Managing Partner Ray Lane.

The precise size of the investment in Fisker wasn't disclosed, but Mr. Lane said it was more than $10 million and "one of our bigger investments." Mr. Lane, the former No. 2 executive at software company Oracle Corp., will join Fisker's board.

Thanks to Kleiner's investment, "we have all the capital we need to move forward according to the plan," said Henrik Fisker, a Danish-born former BMW AG and Aston Martin designer and now chief executive of the company he helped set up last year. Palo Alto Investors, a venture-capital concern, invested in Fisker in an earlier round of fund raising. "We're still going to raise money later in the year, but we don't see that as a big issue," Mr. Fisker said.

Mr. Fisker's vision is to sell 15,000 electric cars a year. Mr. Fisker said the Karma is environmentally responsible and capable of going 125 miles per hour, consistently. It can hit a speed of 60 mph in 5.8 seconds, equivalent to the performance of a gasoline-powered V8 sports sedan, he said.

Entrepreneurs across Silicon Valley are starting all sorts of green companies, from solar to biofuel to geothermal outfits, because they see a potentially vast market for alternative energy amid rising oil prices and increasing worries about global warming.

Silicon Valley money is backing an array of green-car projects that include little-known upstart companies such as Aptera Motors Inc. and Phoenix Motorcars Inc., both southern California companies. Tesla Motors Inc., the high-profile company that is close to shipping a $98,000 electric sports car, has raised $105 million from investors, including VantagePoint Venture Partners, Technology Partners, and Draper Fisher Jurvetson.

Former tech executive Shai Agassi, formerly the products chief at German software behemoth SAP AG, announced last year that he was turning his energies toward electric cars. Mr. Agassi, who runs Project Better Place, a start-up based in Silicon Valley, has raised $200 million for a venture that would sell electric cars designed by auto makers such as France's Renault SA and set up a network of stations where drivers could charge or replace batteries.

When his company first invested in Tesla two years ago, "I think people were really questioning, 'Would we ever have electric cars? Would they be viable?"' said Stephan Dolezalek, a managing director at VantagePoint Venture Partners. Now, he says, "it's no longer about will we, it's about when." Vantage Point has invested in Mr. Agassi's new company.

Venture-capital concerns are searching for new sources of profit as it has become tougher to take public traditional technology companies, such as business-software and telecom companies, after the collapse of the dot-com stock boom. Kleiner has said about a third of its money is going into green-tech start-ups.

Big auto makers are rushing to develop their own electric cars, and it would be an embarrassment to them if they are beaten to the market by a start-up. General Motors Corp. has a working prototype of its Concept Chevy Volt and will hype its progress this week. Toyota Motor Corp. will show its plug-in hybrid based on the Prius, while Chrysler LLC will unveil three battery-powered concept cars.

Mr. Fisker believes his company is a couple of years ahead of bigger rivals because the design of the car has been finalized. "The car we're showing in Detroit is not your usual show car; it's actually a preview of the production car you can buy," Mr. Fisker said.

The Karma, Mr. Fisker said, will use lithium-ion batteries, the most-promising next-generation energy-storage technology for automotive use so far. Some of those batteries, however, have been found to overheat. In 2006 and 2007, reports surfaced that lithium-ion batteries for laptops and cellphones were catching fire, leading to several recalls.

Mr. Fisker wouldn't say what kind of lithium-ion battery the Karma will use, but he said safety concerns have all been "resolved."

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