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Venture Capital - Wednesday, March 28, 2007

Q&A With Vinod Khosla

We recently asked alarm:clock readers to mail in questions for VC titan Vinod Khosla of Khosla Ventures, who has been busy lately making investments in alternative energy. Here some top questions with his responses.

Q1 from Scott Eblen, Library House: I'm interested in hearing Vinod's thoughts on the unintentional effects of the heightened demand for clean technology. One specific example of this is the new competition between "corn as a food" versus "corn as a fuel". The impact of US ethanol demand on Mexican tortilla prices was a dramatic example of how this can play out. I've outlined this situation and some alternative solutions here if you're interested in background:

Vinod Khosla: "I think the effects are widely overstated in their impact – moreover, most of our proposals advance beyond corn-based ethanol in the long run, towards usage of biomass, waste, algae and other items where fuel isn’t competing with food for resources. A lot of what we propose is an addition to current production, not a replacement of its current usage. Mexico’s tortilla crisis has been a function of their import restrictions. The developing world has been asking from reduced farm subsidies and corn ethanol caused a $6b reduction in farm subsidies last year compared to the $3b in ethanol subsidies. This is the main hangup in the Doha round of trade talks."