As of last week, the Menlo Park, Calif.-based firm had locked down $79 million, and it is expected to wrap up fund-raising in August.
Limited partners in the first close include Tudor Investment Corp., State of Indiana Public Employees’ Retirement Fund, Lehman Brothers and San Francisco’s Goldman family, heirs to the Levi Strauss fortune.
Westly himself is a major LP in the fund, as is the firm’s only other managing director, Michael Dorsey. While most venture firms typically request that partners contribute 1% to 3% of a fund’s total, Westly says he and Dorsey each committed about 20% of their net assets to Westly Group II. That works out to about $25 million for Westly and about $5 million for Dorsey.
Elected as controller in 2002, Westly served on a number of boards and commissions, including the California Public Employees’ Retirement System and California State Teachers’ Retirement System. It is unclear if the large state pension funds will invest in the firm’s second fund.
“I used to sit on boards of CalPERS and CalSTRS, and it didn’t matter what kind of fund you had,” Westly says. “The number one 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. I’m working pretty hard, too.”
Like its $12 million debut fund, The Westly Group’s sophomore vehicle will concentrate mostly on cleantech investments. Up to 25% of its portfolio companies may fall outside the sector, however.
“We think diversification is good, and we’re seeing a lot of great deals because of my experience in government and my experience in e-commerce from eBay,” says Westly, who was vice president of marketing at eBay in the auction site’s early years.
He adds that “everyone at the firm,” including several junior staffers, “is focusing on cleantech.”
Westly has had a strong case to make to prospective LPs. His first fund, backed exclusively with money from his own pocket, was profitable within 11 months, thanks to a $3.5 million investment he made in Akeena Solar (Nasdaq: AKNS), a company that installs solar panel systems nationwide and was trading over the counter at the time of the investment. The Westly Group has sold about $16 million worth of Akeena shares.
His fund-raising and investments haven’t slowed down his political activities. The 51-year-old was a California gubernatorial candidate in 2006. He currently is co-chairman of Barack Obama’s presidential campaign in California, and is a member of the campaign’s finance committee.
Westly, a former Carter administration staffer, last year formed The Westly Group, which is housed in the back office of Kleiner Perkins Caufield & Byers in Menlo Park, Calif.