Cleantech investor and Sun Microsystems co-founder Vinod Khosla has already funneled tens of millions of dollars of his own money into dozens of cleantech startups — many of them biofuel firms — yet has had few, if any, big success stories to date. Many of his investments have been lingering in the capital-needy growth stage of development, like cellulosic ethanol maker Coskata, which recently said it could only build its first commercial plant if it gets help from the U.S. government. But now, according to a report from Forbes, Khosla has finally turned to outside investors to create two new funds, which together are looking to close $1 billion, and which could largely invest in cleantech.
According to Forbes, Khosla plans to soon announce a $250 million fund for seed-stage startups and a $750 million fund, dubbed “KVIII,” for larger, more mature later-stage companies. It’s unclear who many of the investors are, but last Fall peHUB reported that California pension company CalPERS was interested in investing in these new funds, so likely CalPERS will be part of this investing group.
So will Khosla just be using these hundreds of millions of dollars to prop up his previous profile of aging cleantech companies that need a lot of capital? Perhaps, but according to Forbes, Khosla has set up an unusual way to help protect investors against risk in the form of a conflicts committee that will review investments. Forbes suggests that Khosla likely set this up to allay investors’ fears that there would be too many follow-on deals from the later stage $750 million fund.
Still, even now that Khosla is trying to play the traditional VC, he’s still putting his money where his mouth is: he’s putting in $150 million of his own dollars into the new funds.