CalPERS ♥’s Vinod Khosla

Vinod Khosla has a penchant for capital-intensive biofuel and ethanol companies, and now he has an A-list limited partner to help finance that predilection: The $244 billion California Public Employees’ Retirement System, which is in advanced talks to commit up to $640 million to Khosla Ventures, according to two sources.

The move will make CalPERS the only Khosla Ventures LP other than Khosla himself, who has been investing from his own pocket since forming the firm back in 2005.

No doubt the money comes at a good time for Khosla. The Republican superstar venture capitalist is a billionaire, but he’s already spent a boatload of his own money on cellulosic ethanol production technology. For example, Range Fuels of Broomfield, Colorado, which is building a big, fat commercial ethanol plant in Georgia, has soaked up $163 million in capital so far, much of which has come from Khosla.

He’s also an investor in the earlier-stage ethanol plant company, Coskata, which has raised around $30 million so far (including from Globespan Technology Partners and a few others); Cilion, which is building six ethanol plants and has raised more than $200 million; and Mascoma, another cellulosic ethanol company. Mascoma — looking to build a commercial-scale biorefinery in Michigan that uses wood as a feedstock — is supersecretive about how much it has collected from investors so far, but last month it closed on a $61 million round from seven investors, including Khosla, pushing the capital it has raised well past $100 million.

The bet on Khosla is highly concentrated, even for CalPERS. It’s not hugely surprising, though. CalPERS prides itself with working with the best investors in their respective fields and it has a long relationship with Khosla, who first visited CalPERS’ board with his pitch about six weeks ago. More, CalPERS has been sussing out private equity opportunities in clean energy production and distribution since around 2006, under the leadership of chief investment officer Russell Read. (Read, as many readers know, leaves the pension on June 30. But people close to CalPERS say his departure won’t have a material impact on its investment decisions).

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  • [...] Verizon to buy Alltel, your cell phone bill to go up? — Verizon has concluded a deal to buy smaller wireless operator Alltel for $27 billion. Combined, the two will pass AT&T to become the largest operator in the US. Alltel has many users in the Midwest, and it has gotten relatively good marks for things like customer service, that market leaders like Verizon and AT&T are not known for. Analyst Craig Moffett of Sanford C. Bernstein is optimistic about such consolidation driving up prices for consumers, as Saul Hansell quotes: The consolidation of Alltel takes another step towards rationalizing and consolidating the U.S. Wireless industry, something that must be viewed as a positive. Fewer players will inevitably mean greater pricing stability (although only marginally so, since the smaller operators increasingly have been in the position of taking their cues from the Big Four anyway), and should lead to marketing efficiencies for all players as competition for retail distribution consolidates. “Pricing stability,” of course, is a euphemism for less competition, but the deal is expected to pass regulators, and anyway, some consumer-rights groups aren’t worried. For mobile startups, this all means there’s one less wireless operator out there to try to work with. Valley VC Vinod Khosla to get backing from CalPERS for cleantech investments — The California pension fund is expected to put up to $640 million into Kholsa Ventures, Khosla’s self-titled and self-funded investment vehicle that has focused on cleantech investments. PEHub has details; see also our previous coverage of the Wall Street Journals criticism of Khosla’s biofuel investments, and his response. Microsoft may buy information management software company Zoomix for $20 to $30 million — more here. HP also getting into cleantech — The storied tech conglomerate has announced an agreement with Xtreme Energetics, to develop a solar energy system that intends to generate electricity “at twice the efficiency and half the cost of traditional solar panels,” it claims. HP is licensing its transparent transistor technology, which it developed in conjunction with Oregon State University, to Xtreme Energetics in exchange for royalty payments. Business software company EMC to buy data storage firm Iomega — The move will set EMC off on a new strategy to create a consumer business in data storage, an area that Google and other consumer-facing Internet companies have also been getting into. The Los Angeles Times launches a tech blog — This means more competition for VentureBeat, which we, of course, welcome. The blog’s staff includes the excellent Jessica Guynn, who was recently hired away from The San Francisco Chronicle. Tags: co:alltel, co:emc, co:Hewlett-Packard, co:Verizon, co:xtreme-energetics, inv:Calpers, inv:Khosla-Ventures SHARETHIS.addEntry({ title: “Roundup: Verizon buys Alltel, CalPERS backs Khosla, and more”, url: “http://venturebeat.com/2008/06/06/roundup-verizon-buys-alltel-calpers-backs-khosla-and-more/” }); Sphere It Digg this story! venturebeat227:http://venturebeat.com/2008/06/06/roundup-verizon-buys-alltel-calpers-backs-khosla-and-more/ var disqus_url = ‘http://venturebeat.com/2008/06/06/roundup-verizon-buys-alltel-calpers-backs-khosla-and-more/ ‘; var disqus_title = ‘Roundup: Verizon buys Alltel, CalPERS backs Khosla, and more’; var disqus_message = ‘Verizon to buy Alltel, your cell phone bill to go up? — Verizon has concluded a deal to buy smaller wireless operator Alltel for $27 billion. Combined, the two will pass AT&T to become the largest operator in the US. Alltel has many users in the Midwest, and it has gotten relatively good marks for [...]%0A%0A %0A %0A ‘; View the entire comment thread. Trackback URL [...]

  • [...] The $244 billion California Public Employees’ Retirement System has staked $640 million in Khosla Ventures. Up to this point, Khosla Ventures was backed entirely by Vinod Khosla himself, who formed his VC firm in 2004 after a stint as a GP at Kleiner Perkins. Vinod’s greentech picks have tended toward the capital-intensive, including major funding of four of the leading cellulosic ethanol companies: Mascoma, Range Fuels, Cilion, and Coskata. The Sun Microsystem founder has taken some flack for his trumpeting of biofuel companies, sometimes in these pages, but also from the Wall Street Journal Op-Ed page. My personal favorite is the ongoing fight between Joseph Romm and Vinod Khosla over whether hybrids are toys or ethanol is a crime against humanity [...]

  • [...] The California Public Employees’ Retirement System (Calpers) is expected to commit up to $640 million to clean tech-focused firm Khosla Ventures, according to a report at Private Equity Hub which cited two sources. [...]

  • [...] Could Bet $640M on Khosla Written by Craig Rubens No Comments Posted June 6th, 2008 at 11:51 am in Big Green Venture capitalist Vinod Khosla is unlikely toretire anytime soon, but he could soon be investing in cleantech with the retirement funds of some of his fellow Californians. Khosla Ventures is in “advanced talks,” peHub reports, with the California Public Employees’ Retirement System (CalPERS), which as manager of some 1.5 million Californians’ pensions is the largest such fund in the country, to commit up to $640 million to the venture capital firm. CalPERS declined to comment and we are still waiting to hear back from Khosla Ventures. [...]

  • [...] Vinod Khosla is going beyond his own pocket to fund the investments of Khosla Ventures. peHub reports that Khosla, who primarily makes cleantech investments, is set to get his first external investor in his fund. The $244-billion California Public Employees’ Retirement System “is in advanced talks to commit up to $640 million to Khosla Ventures”, the report said, quoting sources. If the money indeed flows in from CalPERS’s coffers, the pension fund will become the limited partner of Khosla Ventures LP other than Khosla himself. Khosla was formed in 2005, and has so far invested in companies in biofuels, ethanol and solar energy space. Apparently, Khosla first visited CalPERS’ board with his pitch about six weeks ago. [...]

  • [...] The California Public Employees’ Retirement System (Calpers) is expected to commit up to $640 million to clean tech-focused firm Khosla Ventures, according to a report at Private Equity Hub which cited two sources. [...]

  • [...] According to Private Equity Hub, the eponymous Khosla Ventures is soon to see a funding injection from CalPERS or the California Public Employees’ Retirement System to the tune of $640 million. [...]

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