Google Giddy KP Holds Final Close on Fund XI –

Part of the wait for Kleiner Perkins Caufield & Byers (KP) is over. As anticipated, the Menlo Park, Calif.-based firm held a final close in the last week of April on $400 million for its 11th fund, according to John Denniston, the firm’s chief operating officer.

Now KP is anxiously waiting for an even bigger payout-from the highly anticipated $2.7 billion IPO of Google Inc. The offering, which will be conducted as a dutch auction, is expected to commence in late summer at the earliest.

KP investors can only hope that any future deal made from Fund XI approaches the success of Google. KP invested about $25 million in the search engine provider in 1999 and 2000. It is unclear exactly how much KP’s 23.9 million shares of Google common stock are worth, but the New York Times has conjectured that the shares could be worth north of $3 billion.

KP could not comment on the impending public offering due to SEC restrictions.

In the meantime, KP will stay busy scouting for investments in Fund XI.

KP’s previous fund was fully invested as of “a few months ago,” Denniston said in early May. So far, the new fund has made one unannounced investment, a Series A round led by General Partner Vinod Khosla, who will be part-time in the new fund, and will sit on the stealth tech company’s board.

In addition, KP has “several other investments in the process of closing,” Denniston said. He declined to give specifics, but said they are all early-stage tech companies based in the United States. The firm was expected to begin closing on these deals by the start of June.

“In terms of overall market, we’re seeing an impressive number of high-quality early stage venture opportunities, and we’re hard at work with many of those entrepreneurs,” Denniston said.

The firm expects to invest the fund over roughly a three-year period in emerging growth companies in information technology, life sciences and other fast-growing industries.

VCJ was unable to learn whether public LPs were prevented from investing in the new firm. KP’s stated policy is to not comment on its limited partners.

But other firms, such as Sequoia Capital and Charles River Ventures, have kicked out or have purposely not invited public LPs into their new funds because some have disclosed their private equity performance numbers to the public.

For example, the University of California (UC) was forced by a judge last year to release internal rates of return for all the private equity funds in which it is an investor. UC has been an LP with KP since at least the firm’s second fund (vintage 1979). Trey Davis, a UC spokesman, declined to comment on whether UC was allowed to invest in KP’s Fund XI.

Denniston said the LP base for the new fund is “largely unchanged” from prior funds.

Fund XI will be smaller than its predecessor, both in size and in number of general partners. That total amount of the fund includes a side fund, according to a source close to the firm.

The six general partners in the new fund will be John Doerr, Brook Byers, Joe Lacob, Ray Lane, Ted Schlein and Russ Siegelman.

Four of the 10 who were general partners in Fund X will go part-time with the new fund, and one, Tom Jermoluk, has moved on to another endeavor. In addition to Khosla, Kevin Compton, Will Hearst and Doug Mackenzie – who have collectively been with KP for more than 50 years – will not be managing partners (also known as general partners) in the new fund. Instead, they will server as partners in the fund.

The four men will “work exclusively with the new KPCB fund on technology investing, while also planning to spend more time with family and on personal causes,” according to a statement issued by the firm in late February.

Kleiner Perkins

Caufield & Byers

www.kpcb.com

Founded: 1972

Locations: Menlo Park, Calif. (headquarters) and San Francisco.

Fund Name: Kleiner Perkins Caufield & Byers XI.

Size: $400M

Capital Under Management: $2.7B

Key Execs: Fund XI’s “Managing Partners” are Brook Byers, John Doerr, Joe Lacob, Ray Lane, Ted Schlein and Russ Siegelman. Its “Partners”are Kevin Compton, John Denniston, Juliet Flint, William Hearst, Vinod Khosla and Doug Mackenzie.

Previous Funds: Kleiner Perkins Caufield & Byers X, which closed in 2000 at $471M.

Focus: Wide range of technology.

LPs: Undisclosed.

Past Investments: Over the last 32 years, the firm has backed more than 400 portfolio companies, including AOL, Amazon.com, Compaq Computer, Genentech, Google, IDEC Pharmaceuticals, Intuit, Juniper Networks, Lotus, LSI Logic, Sun Microsystems and Xilinx. The firm says that more than 150 of its portfolio companies have gone public.

Source: PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree Survey; VCJ research.

Alastair Goldfisher contributed to this story.

Email: lawrence.aragon@thomson.com