Kleiner Sets Sights On Schools, Hospitals With Super-Sized iFund

By Timothy Hay

Up until now, Kleiner Perkins Caufield & Byers mostly has focused on social networks, games, entertainment and communications apps with its two-year old iFund for mobile application developers. But now that it’s doubling the size of the fund, to $200 million, the Silicon Valley firm is sending the signal that its investment strategy will shift to reflect the opportunities afforded by the soon-to-be-released iPad by Apple Inc.

At a press conference announcing the super-sizing of the iFund and heralding the “third renaissance in software” ushered in by the iPad, Partner John Doerr said the most compelling uses for the tablet computer will likely be found in health care and education. With the digitizing of the nation’s medical records, “every doctor, nurse and patient should be using an iPad,” Doerr said.

And in a conversation after the firm’s presentation about the educational applications, Doerr said that, unlike a laptop computer, the iPad will resemble a tactile notebook, offering no physical barrier between a teacher and students. Doerr also mentioned the creation of open-source textbooks, but declined to elaborate.

Two stealthy investments Kleiner has made in application developers will soon begin to bear fruit, Doerr said, as they prepare to release apps soon after the release of the iPad. He hinted that these programs will be disruptive to the traditional ways of doing business in schools and hospitals.

Kleiner Perkins clearly believes that the iPad – which Apple is releasing Saturday – will usher in a new era of computing the way the personal computer and the smartphone once did, because the tablet’s smooth, touch interface will give users a much more personal and engaged experience.

“We believe it’ll rule the world,” Doerr said. “I’ve touched it; I’ve held it and caressed it…It feels gorgeous. It isn’t a big iPhone, but it is a big deal.”

It has been nearly two years to the day since Kleiner launched its $100 million fund for iPhone developers, and the fund has been entirely put into play, having funded 14 companies, Doerr said.

No iFund investment has yet resulted in an exit, though Doerr suggested it’s only a matter of time. “It’s the worst possible time to exit” now because “we’re right at the knee of the curve” when it comes to growth in the mobile arena. Kleiner is a “very patient” investor, he added.

Four of the 14 companies are now profitable, said Partner Matt Murphy, who joined the event by telephone and declined to name the four companies.

Murphy said that companies in the firm’s iFund portfolio have achieved more than $100 million in 2010 mobile revenue and more than 100 million aggregate mobile downloads.

While three of the iFund’s investments to date are still in stealth mode, Kleiner has named the other beneficiaries of the fund. They are social network Pelago Inc., game developer Ngmoco Inc., home-automation company iControl Networks Inc., music application Shazam Inc., check-in game Booyah Inc., enhanced text-messaging app Gogii Inc., and game company Zynga Inc.

Those disclosed Wednesday for the first time as iFund investments were photography app Pinger Inc., mobile multimedia viewer Cooliris Inc., mobile ad network InMobi Inc. and incentive-program app ShopKick Inc.

The firm does not disclose the amounts of iFund investments.

The 14 portfolio companies of the iFund to date have collectively attracted $330 million from follow-on investors, Doerr said.

Doerr declined to comment on the structure of the iFund or whether Kleiner raised an additional $100 million to double the pool or if it reallocated existing assets. He added that most of the iFund’s new $100 million will go toward new investments and not just follow-on investments of existing portfolio companies.

-With reporting by Pui-Wing Tam