Westly Wraps Sophomore Fund

The Westly Group, a cleantech firm launched by former California Controller Steve Westly two years ago, has raised a second cleantech fund with more than $100 million in commitments.

Westly, speaking at the Reuters Global Climate and Alternative Energy Summit in San Francisco, said that he would formally announce the fund the week of Sept. 14.

“I will have a formal announcement next week,” he said on Sept. 9. “Our goal was to raise $100 million despite a historically challenging financial market. We will exceed that goal.”

Still, fund-raising took longer than anticipated. VCJ reported in its July 2008 issue (see “Westly Cleans Up with Second Fund”) that the firm had raised $79 million and expected to wrap up fund-raising in August 2008. The fund had a target of $130 million, according to a regulatory filing.

As previously reported by VCJ, limited partners in the second fund include Tudor Investment Corp., the State of Indiana Public Employees’ Retirement Fund, Lehman Brothers, and San Francisco’s Goldman family, heirs to the Levi Strauss fortune.

Westly, who as state controller served on the boards of the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, is himself an LP in the fund. Michael Dorsey, the venture firm’s other managing director, is also an LP.

“We made a large personal commitment to the fund,” Westly said. “We believe that is important, so the principals in our fund committed over 20% of the capital of the fund.”

In an interview with VCJ last year, Westly said: “I used to sit on boards of CalPERS and CalSTRS, and it didn’t matter what kind of fund you had. The No. 1 correlation to being successful was the amount of capital the principals themselves had committed. If you have $1 million of your own money in the deal, you’re going to work pretty hard.”

Westly, who was previously a top executive with online auction company eBay before he served in public office, said he remains confident that cleantech companies will help propel future initial public offerings.

Westly said he also is confident cleantech companies will help propel initial public offerings.

“I’m incredibly bullish about the IPO market in 2010,” Westly said, adding that he expects a dozen initial public offering of cleantech companies. “It wouldn’t surprise me if we exceeded that.”

Our goal was to raise $100 million despite a historically challenging financial market. We will exceed that goal.

Steve Westly

Other investment areas of interest to the Westly Group are electric vehicles—it has invested in electric car maker Tesla Motors—smart-grid technology, green building materials, recycling and solar energy.

“We think the entire solar marketplace is dynamic,” Westly said. “It is going to change quickly. There will continue to be new opportunities and we are looking at two to three solar companies as we speak.”

Westly Group is also seeking opportunities in China, which the firm plans to use as a springboard into the broader Asia market.

Westly noted that he travels to China every 90 days to meet with other venture capital firms as well as government officials.—Jim Christie, Reuters with additional reporting by VCJDEALWATCH: Five investments by The Westly Group

Cooliris Inc._Plug-ins that provide web link previews.

Glacier Bay Inc._Tthermal management and energy control systems.

QuickHealth Inc._Primary care provider.

ShotSpotter Inc._Gunshot tracking systems.

Tesla Motors Inc._Electric vehicles.

Note: Investments made from June 2008 to September 2009. Source: Thomson Reuters