, an oil and gas exploration startup, is puncturing Kleiner Perkins’ energy portfolio according to a report on PE Hub.
The company is developing 3-D mapping technology which is supposed to find oil and gas underground. Then it drills for oil itself, as opposed to selling the software.
Terralliance has raised rounds with Kleiner in the past 5 years, starting at $10 million in 2004, then $35 million in 2005 and finally $250 million in 2006. That last round valued the company at $910 million, and included Kleiner Perkins, Goldman Sachs, DAG Ventures and Ithmar (Dubai-based PE firm), says PE Hub. Last summer Fortune reported that the company was trying to raise $1 billion at a $4 billion valuation.
Terralliance’s CEO, Erlend Olson, seems to have blown through the cash. He wasted money on work that could have been outsourced, and made promises he couldn’t keep. When reality came crashing down on the company, they let 80% of the staff go and he was canned.
And now Kleiner faces financing problems for the startup:
PeHub: Terralliance and its venture backers also want to renegotiate the company’s debt, but that is proving very difficult. The lenders apparently believe that, if the company can’t survive under its current capital structure, that the best bet for recovery could be an asset sale or other type of liquidation (that’s really me surmising, as I haven’t spoken to the lender, or even been able to identify it). Terralliance also is seeking new equity capital to help make its loan payments, but so far has not been successful.
All of this, of course, makes it look like the VC investors were either asleep at the wheel, or perhaps duped (shades of Entellium?). KP’s reps were John Doerr and Joe Lacob, while Goldman’s were Joe DiSabato and Ken Pontarelli. Also on the board was private investor Ken Foster (former CEO of Newfield), while Colin Powell is listed among its advisors.
Kleiner declined to comment to PE Hub for this story. We’ve put in an email to Kleiner and will update if we hear anything.
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