Coming Soon: A VC Fund Focused Only on Green Building

Startups focused on green construction and buildings are soon going to have a new place to look for money.

A VC fund targeted at the green-building market will be unfurled soon, sources tell me. The name starts with an N. I’ll follow up with more details later. (I’d have the complete name for you, but I wrote it on a scrap of paper I can’t find at the moment. You want transparency in the media? There you go.)

Funds that specialize in a particular niche have a somewhat uneven history. Intel Capital has launched a bunch of specialty funds – for communication, to promote its Itanium processor, to encourage investment in Russia and the Middle East. Some have succeeded, but many of them have fizzled out. In the past three years, Kleiner Perkins has been popping out specialty firms like kittens. The firm has a $100 million fund focused on Apple-related technology as well as a $200 million fund for bio-defense and pandemics. The challenge is finding a large enough opportunity that can support a dedicated fund. Merging funds like this is tough: You can’t really have the TechCrunch 50 Pandemics and iPhone Apps Conference.

Green building, though, is at least a large market. Nearly 40 percent of the electricity consumed in the U.S. goes to keeping on lights, running air conditioners and powering the other devices in buildings. Building technology and components often aren’t very energy efficient and have not evolved much in decades. Foundation Capital has been one of the more active firms in green building to date, but others are placing bets too.

The market can be broken down into four areas. First, there are the green building companies such as Michelle Kaufmann Designs and Living Homes that are building modular green homes in factories. The photo shows the home of Living CEO Steve Glenn under construction.

Then there are the building supply companies producing green versions of traditional building products, such as Integrity Block (building blocks made of compressed earth), Serious Materials (eco-friendly drywall and energy efficient windows) and PhotoSolar (windows that block thermal heat from entering buildings.)

Third, you have the makers of energy-efficient appliances and devices. This includes giants like Whirlpool, which has reduced the power consumption of appliances by over 60 percent in the past few decades, as well as startups like Ice Energy with its ice-powered air conditioner.

Fourth, there are software and smart-metering companies that monitor consumption.

This is my own breakdown of the market, so feel free to disparage it in the comments section below.