ABOUT THIS COMPANY

ABOUT THIS COMPANY

KPCB's prestige certainly finds support in the stats-since its founding in 1972 by Eugene Kleiner and Tom Perkins, KPCB has invested in more than 340 companies, of which over 250 have successfully gone public. In 1999, KPCB invested in 21 new ventures. Many of its portfolio companies have become industry leaders, including Ascend Communications, Netscape, Sun Microsystems, Compaq, Genentech, and Amazon.com.

Investment strategy

With $1.5 billion in investment capital under management, KPCB offers funding to ventures at the seed through third stage of financing. However, the company's stated specialty is early stage financing for technology companies. Specifically, the company's portfolio is divided into two primary areas: information sciences and life sciences. Within information sciences, the company's portfolio breaks down into five subsections: Internet, enterprise software, consumer media, communications, and semiconductors. On the life sciences end, investment is geared toward companies in three groups: medical devices and diagnostics, drug discovery and therapeutics, and healthcare services and informatics.

Life in the Kleiner keiretsu

Kleiner investees don't get just cold hard cash-they enter the Kleiner network of companies. The firm subscribes to the idea of keiretsu, a Japanese concept referring to networks of companies bound together by mutual obligations and contacts. For Kleiner, Internet-based technologies have provided a fabulous opportunity to forge such a network, with Netscape at its center. @home, which purchased Excite in January 1999, is another keiretsu member. A unique player in the Kleiner keiretsu is Integral Capital Partners, another investment firm that is managed separately from, but shares offices with, Kleiner. Integral is also focused on the information and life sciences industries. Unlike Kleiner, Integral invests in expansion- and growth-stage companies. One of the better examples of the Kleiner keiretsu (which includes more than 175 companies) is the alliance between Excite and Intuit, both Kleiner companies. As described in Fortune, Excite helped Intuit establish its beachhead on the Internet, and Intuit features Excite in its Quicken products. Fortune also pointed out that Intuit helped Excite with cash: a $40 million investment, and a $50 million loan to help the search engine complete its deal with Kleiner darling Netscape. Despite those examples of cooperation, Fortune gives the Kleiner keiretsu the thumbs-down, noting that the concept led to Japan's economic downturn in the '90s.

Follow the Sun

Kleiner Perkins Caufield & Byers has a very special relationship with Sun Microsystems, the Palo Alto-based technology company that developed the Java programming language that runs across all types of computers and is prevalent on many Web sites. KPCB super-star partner Vinod Khosla is a founder and former CEO at Sun. Regarding his Sun experience, Khosla told Red Herring, "A lot of guys have gotten into [the VC field] recently who have never started a company. They have no operating experience. And they think being on a board gives them the right to advise entrepreneurs. The fact is you've got to earn that right by getting into the nitty-gritty grime and dirty stuff yourself."

A rich, steamy cup of Java

Additionally, KPCB has established a $100 million Java Fund that requires technology start-ups receiving KPCB funding to use and develop Java technology. Investments through the Java Fund include Active Software, Calico Technology, Healtheon (which merged with WebMD and several other medical web sites in November 1999 to become Healtheon/WebMD), and Viant. Ted Schlein, a KPCB partner, is the fund manager.

Party like it's 1999

Like most VC firms with a technology focus, KPCB enjoyed a healthy return in 1999. IPOs included Calico Commerce, which quadrupled in its first day of trading, E.piphany, which shot up 180%, and Homestore.com. Additionally, several KPCB companies were involved in high-profile mergers. Most noteworthy were Cerent (acquired by Cisco Systems for $6.9 billion) and Siara Systems (sold to Redback for $4.3 billion). KPCB continued its Internet momentum in 2000, investing in Hire.com, an online recruiting service and Zagat Survey, an online review and reservation site developed by the publishers of the famous restaurant guide.

Noteworthy partners

Ten partners comprise KPCB's management team. John Doerr is probably the most well-known of all the partners. Although he denies it, many regard Doerr as the firm's most influential partner. A former Intel engineer and marketing wiz, Doerr joined Kleiner in 1980, and helped the firm complete investments in Compaq, Netscape, Lotus, Sun, and other dazzling companies. Doerr is a graduate of Rice University and Harvard Business School. For those interested in biotech and pharmaceuticals, a notable partner at the firm is Cynthia Healy. The director of life science research, Healy joined the firm after 11 years in the pharmaceutical industry. She holds a Ph.D. in pharmacology from New York Medical College.

Of all the KPCB partners, Vinod Khosla probably garnered the most press in 1999. Prior to his 15-year tenure with KPCB, Khosla co-founded Sun Microsystems. In 1999, Khosla funded some major success stories in the optical networking space-a sector that The New York Times labeled the "hottest new area in the technology sector." Khosla's companies include Cerant, Siara Systems, and Juniper Networks. However, Khosla is known for more than his technical acumen. He was named one of the 25 most powerful people in networking by Network World. In August 2000, KPCB added Ray Lane, formerly the No. 2 executive at software developer Oracle, as a general partner. Lane, who left Oracle on less-than-friendly terms in June 2000 after his role at the company was reduced by CEO Lawrence Ellison, will focus on startups in the business-to-business software and services sector-possible competitors to his old employer, Oracle.