Back in 2012 if you had predicted that the climate tech startup category would be worth $2.6 trillion today, you would have been laughed out of the room. That year was the nadir of first “clean tech” investing wave, which poured some $25 billion into earth-saving startups. Less than half of that capital was returned according to an infamous MIT postmortem (which conveniently excluded Tesla). Deep technology in particular “…consumed the most capital and yielded the lowest returns,” said the report.
But two investors would have believed you. Their venture firms, Khosla Ventures and SOSV, continued to back deep tech, climate-focused companies despite the troubled track record. Today, the firms have two of the best climate portfolios in the world. Vinod Khosla and Sean O’Sullivan will join us at the SOSV Climate Tech Summit (Sept 26-27 / free & virtual / register now) for a one-on-one conversation about the past, present and future of climate tech investing.
Vinod, born in an Indian army household, migrated to the United States in 1976 and co-founded two landmark companies: Daisy Systems, the first major design software for electrical engineers, and Sun Microsystems, a pioneer in computing workstations and servers that invented the Java programming language. Khosla then joined Kleiner Perkins Caufield and Byers (KPCB) as a General Partner, leading investments in semiconductor company NexGen and internet routing pioneer Juniper Networks (earning a 2,500x return). He founded Khosla Ventures in 2004 partly to fund “science experiments,” as he puts it, and became an OG of the clean tech 1.0 investment wave.
For Sean, born in New York City, the path to climate tech venture was also marked by early success. As an undergraduate engineer at Rensselaer Polytechnic Institute in 1986, he co-founded his first company, a desktop PC mapping app called MapInfo. Sean took the company public in 1994 and founded SOSV in 1995 to invest as a super angel. His early climate tech investments included Carma (2007), GetAround (2011) and Jump Bikes (2012), and today SOSV’s Climate Tech 100 is a powerful statement of Sean’s commitment to the category.
When most VCs gave up on cleantech around 2012, Vinod and Sean kept exploring and investing. Vinod called for “Reinventing Societal Infrastructure with Technology” in a 2018 blog post. Innovation in food, health, housing, transportation, industry—“The big needs in society”—would inherently produce cleaner, climate-friendly technologies, he argued. Sean, meanwhile, scaled SOSV from a personal investing vehicle into a global firm focused on “deep tech for human and planetary health.” Across industries, there was an opportunity for the “reinvention of all of these different means of production,” as Sean told Bloomberg earlier this year.
Today, Khosla Ventures has $15B under management and has invested in over 30 climate tech companies. Four have gone public—Amyris (bio-based materials), QuantumScape (solid state batteries), View (smart buildings), and LanzaTech (climate-friendly materials and fuels). Khosla also backs several climate unicorns including Commonwealth Fusion Systems (nuclear fusion) and Impossible Foods (plant-based meats).
SOSV has $1.5 billion under management and operates the IndieBio and HAX startup development programs, which launch 100+ pre-seed companies a year in bio-tech and hard tech. Many of those are climate tech companies, and Pitchbook has recognized SOSV as the most active investor in climate globally. The top 100 companies in the SOSV climate portfolio represent $11.69B in value and have raised $3.77B. They include unicorns like Perfect Day (fermentation-based proteins), NotCo (plant-based proteins using AI), UPSIDE Foods (cultured meat), and Formlabs (3D printing). Khosla Ventures and SOSV have co-invested in two climate startups: Oobli (sweet proteins) and Vertical Oceans (shrimp farming).
What can we learn from these titans of climate tech about backing breakthrough “science experiments”?
Vinod Khosla is an entrepreneur, investor, and technology fan. He is the founder of Khosla Ventures, focused on impactful technology investments in software, AI, robotics, 3D printing, healthcare and more. Mr. Khosla was a co-founder of Daisy systems and founding CEO of Sun Microsystems where he pioneered open systems and commercial RISC processors. One of Mr. Khosla’s greatest passions is being a mentor to entrepreneurs, assisting entrepreneurs and helping them build technology-based businesses. Mr. Khosla is driven by the desire to make a positive impact through using technology to reinvent societal infrastructure and multiply resources. He is also passionate about Social Entrepreneurship. Vinod holds a Bachelor of Technology in Electrical Engineering from IIT, New Delhi, a Master’s in Biomedical Engineering from Carnegie Mellon University and an MBA from the Stanford Graduate School of Business.
Sean O’Sullivan is an entrepreneur, venture capitalist and philanthropist. He started SOSV in 1995, and today the firm operates two pre-seed startup development programs, HAX and IndieBio, which graduate more than 100 companies each year in bio tech and hard tech addressing the broad mission of “human and planetary health.” The states of New York and New Jersey committed $25 million each to support IndieBio in New York City and HAX in Newark. Sean’s family foundation wrote the first major check for Salman Khan’s Khan Academy and also co-founded CoderDojo and the Autism Impact Fund. Sean holds a Bachelors of Science in Electrical Engineering from Rensselaer Polytechnic Institute and a Masters of Fine Arts in Film Production from the University of Southern California.