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Green is good for venture capitalist

People – September 2007

Green is good for venture capitalist
By Chris Roush

When SJF Ventures pumps money into some touchy-feely, Earth-friendly business that recycles computers or installs solar-powered water heaters, it’s partly because of David Kirkpatrick’s liberal-arts education at Duke University. His bachelor’s in physics and history got him “looking at how we can change the world for the better.”

That’s fine, as long as he doesn’t change his business for the worse in the process. And so far, Kirkpatrick, 47, has done OK as managing director of the Durham venture fund. Of the 25 companies SJF has funded during the past eight years, only one — a plastic-adhesive maker — has folded.

Among its current investments are Jackson Miss.-based Intechra, which recycles personal computers, and White River Junction, Vt.-based GroSolar, which installs solar-powered water heaters and air conditioners. SJF’s best return was more than 500%.

One advantage he has is a history of running similar companies. A military brat born in Columbia, S.C., he grew up in Charlotte, Houston, Germany and Greenville, S.C. After graduating from Duke in 1982, he started Durham-based SunShares, which installed solar water heaters. He got an MBA from UNC Chapel Hill in 1991 and left SunShares three years later to start KirkWorks, which matched environmental companies with investors.

In 1998, he began talking to Rick Defieux, a former environmental scientist working as a venture capitalist in Philadelphia. They raised $17 million — primarily from banks — in the Sustainable Jobs Fund a year later. It initially focused on startups, but Kirkpatrick now seeks more mature businesses.

He says a second fund of $28 million will perform better, but it will face more competition. More firms want to invest in so-called “clean tech” companies. Such investments increased 78% to $2.9 billion in 2006, says the trade group Cleantech Venture Network.

But there are also more green businesses wanting money. When Kirkpatrick started, he was reviewing 30 companies a month. Now SJF, with eight employees, reviews 200. It beat out a larger venture capital firm in Boston to invest in GroSolar. “We won that opportunity because we were a socially responsible fund.” Maybe that liberal-arts education is paying off.

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