Following Private Equity Week’s publication of controversial remarks Vinod Khosla made about the pending IPO of nanotech company Nanosys, Khosla has issued a “clarification” and an apology.
Khosla, a general partner at Kleiner Perkins Caufield & Byers, was traveling and couldn’t be reached for comment last week. He issued the following statement to PE Week via email:
“There is one very important clarification to your recent article – all of the concerns I expressed were intended to articulate my opinions about the nanotechnology’ industry generally, and not about any specific company. I was not referring to Nanosys’ business prospects or its registration statement. I have not formed any judgment on either. To the extent that anyone took my comments as indicating that I thought that Nanosys’ prospectus was false or misleading, I retract my statement and apologize to the company for any such misimpression. I certainly did not intend to imply that Nanosys or any particular company might deliberately mislead or defraud the public market. I was simply expressing my view that nanotech companies that do not yet have products may be likely to disappoint investors because nanotechnology development is at such an early stage that it is inherently unpredictable. I have expressed this opinion consistently in the past with respect to nanotechnology and other technologies.”
PE Week reported some of Khosla’s comments about Nanosys in its June 7 issue, based on statements he made at the May 27 MIT/Stanford/UC Berkeley Nanotechnology Forum at Stanford University. His remarks were later re-reported by the San Jose Mercury News.
At the Nanotechnology Forum, someone in the audience asked what Khosla thought about Nanosys’ prospects.
Khosla replied: “Personally, I think it’s the wrong model for a company, and I think it’s a shame that they’re going public because I don’t think they are in a position to be predictable enough. And whether they are doing it knowingly or unknowingly, there is a reasonably high likelihood that they will defraud the public market, and I think that’s a shame.”
Additionally, Khosla said: “And I would say that because Nanosys is going public people who are involved approach companies [inaudible words] and say, We can take you public.’ Because bankers are out to make that 6% commission that they make on the public offering. And I think it’s irresponsible of bankers. I have companies that have been approached who have been told we can take you public today. My answer to the CEO was, If you’re wasting your time talking to bankers you’re not the right CEO. I feel pretty strongly about that.”
Nanosys declined to comment. It is in a quiet period as part of its planned IPO.
The Palo Alto, Calif.-based company filed an S-1 statement with the SEC on April 22 declaring its intent to raise $115 million through an IPO. The 3-year-old company has not yet set the terms of the offering.
If the IPO is successful it would be a boon for more than 10 venture firms that have backed Nanosys, including Arch Venture Partners, Polaris Venture Partners and Venrock Associates, which each own more than 10% of the company. Its other venture backers include CDIB BioScience Venture Management, Chiao Tung Bank, Eastman Kodak Co., Harris & Harris Group, In-Q-Tel, Lux Capital, Prospect Venture Partners and SAIC Venture Capital.
The underwriters for the Nanosys offering are Merrill Lynch & Co., CIBC World Markets, Lehman Brothers and Needham & Co.