Vinod Khosla Boosted Funds to Over $1B


The turn of the new year seemed to act like the flip of the light switch in terms of greentech venture investing — already in 2010 greentech startups, and particularly smart grid firms, are seeing a rush of investment. And it looks like Vinod Khosla — famed venture capitalist and barometer of the green markets — is feeling even more bullish in the new year, too. According to filings yesterday (here and here) Khosla Ventures has actually upped the size of its new funds, a large portion of which will go to cleantech, to a total of $1.3 billion, from a previous announced total of $1 billion.

Khosla Ventures has raised $1 billion alone in its Khosla Ventures III fund, which will be a more traditional venture investment fund looking at early-, mid- and later-stage firms (they previously had set the fund at $750 million). And the group has raised $300 million for its early-stage fund called Khosla Ventures Seed Fund (previously sized at $250 million), which Khosla has described as looking for “the highest risk projects,” which he said, “often cannot find any other funding.”

As we reported back in September, these funds are the first time Khosla has turned to external investors; he was previously using his own funds to invest in startups (quite unusual for a VC). And a substantial portion of these funds will be focused on cleantech startups.

While Khosla hasn’t gone into details about who all his new investors are, the press release back in September quoted Joncarlo Mark, senior portfolio manager at CalPERS. And according to documents from back in June (hat tip peHUB) the California pension fund has committed to invest $60 million into the early-stage clean technology fund.

According to a Forbes report from July, Khosla is doing something unusual with Fund III: He’s set up a way to help protect investors against risk in the form of a conflicts committee that will review investments. Forbes suggested that Khosla likely set this up to allay investors’ fears that there would be too many follow-on deals from his previous investments in the later-stage fund.

While upping a fund by $350 million isn’t massive, it’s yet another sign that 2010 will see a rebound for greentech venture investing from some low points in 2009 (see our GigaOM Pro report on Q4 greentech numbers, subscription required).

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