Khosla raises new $1 billion in two funds for cleantech investment

In California, Khosla Ventures has announced two new cleantech investment funds with a combined $1 billion in fresh capital.

The first fund, $250 million in size, will fund new startups, while the larger $750 million fund will provide fresh capital to companies that are seeking funds for scale up and commercialization. The second fund is an example of an approach to solve the “valley of death” problem that befalls companies as they transition from small early-stage companies and find themselves too big for traditional VC investments but too early to attract project finance interest.

According to a report in Forbes, Khosla will set up a “conflicts committee” for the new funds that will oversee and limit re-investment in old companies that have not succeeded. Bnet.com is reporting that “Talk is growing of a spate of cleantech IPOs down the road.”

Khosla invested in Coskata, Amyris, LS9, RangeFuels, LanzaTech, Gevo and KiOR, as well as an interest in Cello Energy, which recently attracted interest when the company was assessed $10 million in liability to an earlier round investor. Among other Silicon Valley giants, Burrill & Company has also commenced development of a new cleantech fund.

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