Khosla Ventures said on Tuesday it had raised more than $1 billion for renewable energy and clean technology funds, a sign that skittish investors are hot for climate-change-related projects.
The news marked the largest clean technology-dedicated raise by a single venture capital firm since 2007 and was also the first time Khosla Ventures, founded in 2004 by Sun Microsystems Inc founder Vinod Khosla, has raised funds from outside investors.
Previously the venture capital firm had invested hundreds of millions of dollars on behalf of its partners, including Khosla himself, who was not available for comment.
Menlo Park, California-based Khosla Ventures is among the most active early stage investors in renewables and other alternative energy technologies. Khosla himself was an early backer of biofuels.
The venture funds' investments will range from improvements on renewable technology, like solar power, to efficiency and biofuels and new battery systems.
Investors in the new funds include the California Public Employees' Retirement System (Calpers), the largest U.S. public pension fund.
The fact that they received money from Calpers is a vote of confidence. Calpers believes enough in the Vinod Khosla brand that they would like to formally ally themselves with it, said Dallas Kachan, managing director of industry research and consulting firm The Cleantech Group. It is further vindication that very important sources of capital feel that we are also past the worst in clean technology investment.
This year has been difficult for venture capitalists, who have been slow to put money into new companies during the recession because they have had trouble cashing out earlier investments due to the sluggish market for initial public offerings and takeovers.
In the second quarter, the number of venture capital funds that raised money fell to 25, the lowest in 13 years, according to the National Venture Capital Association.
Clean technology investment by venture capitalists, however, rebounded to $1.2 billion in the second quarter following two quarters of declines, according to The Cleantech Group.
We're starting to see the floodgates open now, and today is just the latest data point in several months now of good news from the world of clean technology, Kachan said.
Khosla Ventures was the second most active venture firm during the second quarter, behind Vinod Khosla's former firm, Kleiner Perkins Caufield & Byers.
Khosla Ventures' new funds include the $250 million Khosla Ventures Seed fund, which is focused on high-risk projects that often have difficulty securing capital, the firm said.
The second fund, Khosla Ventures III, is targeted at early and mid-stage firms and had aimed to raise $750 million. Both funds were oversubscribed.
Khosla Ventures' many clean technology investments include solar thermal company Ausra, geothermal company AltaRock and biofuels makers Mascoma, Coskata, Range Fuels and Verenium.
(Reporting by Nichola Groom and Peter Henderson; Editing by John Wallace and Richard Chang)