The Menlo Park, Calif.-based firm, which hit it big with Tesla Motors and Amyris stakes, plans to continue investments in a range of technologies focused on clean energy and energy efficiency, with a special focus on green building technology.
Westly, the former eBay executive and California politician who runs the firm, also expects to put about 20 percent of the fund into Internet companies. Up to a fifth could be invested outside the United States, especially in China, he added.
Westly noted that that the firm’s current fund has “at least one company in the portfolio that we believe will be over a hundred million [in revenue] next year. Depending on market conditions they should be able to go public, and that’s Amonix.”
Amonix, based in Seal Beach, Calif., was founded in 1989 and makes concentrated photovoltaic solar power systems. It has raised $143 million in venture capital over four rounds since 2007 from The Westly Group, Adams Street Partners, Angeleno Group, Goldman Sachs & Co., Kleiner Perkins Caufield & Byers, MissionPoint Capital Partners, New Silk Route Partners and Vedanta Capital, according to Thomson Reuters (publisher of peHUB).
The Westly Group’s new fund will be the second for the firm, but the third for Steve Westly. Westly launched a debut fund with $16 million of his own money in 2000, then The Westly Group closed on $127 million from institutional investors in 2009, said Michael Kaufman, a principal with the firm.
The second fund, formally known as Westly Group I, is not fully invested. “We’re just coming to the end of the line — we have a few more bets to make,” Kaufman said. He added that the firm could start investing from the new fund as early as next month.
UPDATE: In an email to peHUB, Kaufman said that as of March 31, Westly Group I had produced a “30.4% net IRR [and] 1.44x fund multiple” and had “distributed 73% of paid-in capital back to LPs.” Those results are largely thanks to Tesla Motors and Amyris Biotechnologies, which both went public last year. Tesla “returned 7.6x on invested capital with a 239% IRR,” while Amyris “returned 2.1x on invested capital with a 60% IRR,” Kaufman said via email.
The market for selling startups to big companies or in stock offerings is improving, as is interest by investors who want to get into startups on the ground floor.
“You are going to see a lot of cleantech IPOs here,” Westly said in an interview with Reuters. PwC said that first quarter 2011 IPO proceeds hit $12.4 billion, the highest since 2008.
“I think there is a good chance we have an M&A exit this year, maybe two,” Westly said.
Big energy companies and technology companies are both showing interest in the sector. French energy major Total SA recently offered $1.37 billion for a majority stake in California solar panel maker SunPower.
“Big guys from two completely different worlds are both kind of converging on cleantech,” Westly said.
His firm aims to invest in second and third rounds of fundraising and offer help navigating the world of government, which can be a major buyer of clean technology, as well as backer with loans and grants.
The National Venture Capital Association characterized a 26 percent rise to $1.0 billion in clean technology VC investments in the first quarter vs. the fourth as evidence of a “reasonable, rational” pace in the VC industry.
“Two things I know for sure — [it's] clearly tougher to raise money now than it was, you know, three or five or 10 or 15 years ago, but I can just feel out there, it is getting easier every month because the economy is coming back, people are feeling more optimistic,” Westly said.
By Peter Henderson and Poornima Gupta, Reuters
Additional reporting by Lawrence Aragon, peHUB