Clean technology is among the hottest sectors in Silicon Valley, with venture capitalists pouring billions of dollars into companies they hope will upend the carbon economy.

This year is on track to produce a record number of venture deals in the industry, with direct investments of more than $2.7bn in green businesses internationally, according to the Cleantech Group and Deloitte.

The partners at many venture capital firms are using their fortunes to build the most ecologically friendly homes they can conceive of, vying with each other for the title of ”greenest house in America.”

Paul Holland, a partner at Foundation Capital, is putting the finishing touches on his earthy palace in Portola Valley, an upscale hamlet off Sand Hill Road, with his wife Linda Yates.

A sprawling compound on 2.7 acres of gentle hillside, the house will produce more energy than it consumes. The steel roof is sheathed in solar panels and the three-car garage is fitted with electric car charging stations.

Foundation Capital has invested $200m in clean tech companies, and Mr Holland is using products from five of them in his house.

Serious Materials made the energy-efficient windows. Silver Spring Networks made the smart meters. Control4 made the home automation system, operated through an Apple iPad. CalStar made the bricks and blocks out of fly ash. SunRun made the solar panels.

“Energy efficiency is part of Foundation’s investment thesis,” said Mr Holland. “We’re trying to help create this market for green goods.”

These products will help make the house among the most ecologically friendly possible, according to the Leadership in Energy and Environmental Design (LEED) certification system.

Two of Foundation’s investments, CalStar and Serious Materials, came about as a result of research Mr Holland was doing for the house.

But Mr Holland has competition. Partners from Kleiner Perkins Caulfield & Byers and Draper Fisher Jurvetson, two pre-eminent VC firms, are also jockeying to erect houses that show off eco-friendly wares from their portfolio companies. And other technology luminaries, including Netflix chief executive Reed Hastings, are also focusing on sustainability as they build new homes.

Jen Fonstad, managing director at Draper Fisher Jurvetson, recently completed construction of a four-bedroom, 5,000 square feet Spanish Mediterranean style house on two acres not far from Mr Holland’s home.

Ms Fonstad and her husband Diego built a more traditional home among mansions built with fortunes made during the dotcom boom. It features a tennis court and private vineyards. “The idea is to demonstrate that you can build a comparably priced home without compromising on design,” said Ms Fonstad. “You don’t want to change the way people live their lives.”

To build the house, the Fonstads turned to a well-regarded contractor that specialises in eco-friendly projects. “Showing a green builder how to do a luxury home is easier than showing a luxury builder how to do a green home,” said Mr Fonstad. The Fonstads’ house also incorporated products from DFJ portfolio companies, including LED lights from Intematix.

Building such eco-temples with the newest technology costs more than the average home. But Mr Holland argues that much of the costs will be recouped over time in the form of reduced energy bills.

There may also be less tangible benefits. Both couples hope their projects will inspire more residential green building. Mr Holland and Ms Yates are “open-sourcing” their project, posting their research, successes and stumbles on a website about the house.

“We want to build the greenest home in the country and try to inspire people,” said Ms Yates. “Our house is not going to fix the problem, but we can be a pebble in the pond.”

The Fonstads, too, are using their home as a teaching instrument. In the living room a large whiteboard diagrams the lengthy LEED certification and highlights a number of green features in the house.

Peter Yost, a partner at Building Green and a consultant on the Holland project, said venture capitalists were uniquely positioned to spread the gospel of green. “They have the odd combination of an altruistic approach, and a belief that they can make money as they go along,” he said. “Their attitude is, ‘If this is what the industry needs, then we’ll do it.’”

Mr Yost was also surprised at the amount of collaboration he saw between the various families who, in spite of working at rival venture capital firms, are friends and share knowledge about their building projects. “It’s uniquely Silicon Valley,” he said. “You can’t hold your cards too close to you chest there, because you’re going to need those contacts on deals in the future.”

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