Redelf said a company he backs, Dust Networks, provides the wireless networking technology behind Streetline Networks. Even so, he said his firm does take into account privacy worries in weighing a future technology for funding.

While no technology he has reviewed was actually rejected over privacy problems, he said a current funding proposal in the health care sector that he would not name might be turned down over ethical concerns.

Redelf said many factors can kill an investment, including worries over even a perception by the public of privacy and ethics concerns. Last year, Foundation Capital interviewed makers of 118 technologies who were seeking funding, but only two received funds, he said. In addition, he read lengthy proposals for another 160 technologies, meaning nearly 300 came to his attention.

"That's a typical year," he said.