Khosla Ventures raises Fund of $1.05 Billion

Vinod Khosla, the famous venture capitalist, has recently announced that his venture capital firm, Khosla Ventures, has managed to raise a fund of $1.05 billion. If we are comparing this amount of money with the ones raised by other venture capital firms, we can notice that this new investment puts Khosla Ventures among the top five firms who have raised the biggest funds this year.

The company announces that this amount of money is going to be used for numerous purposes. According to a report published in the Wall Street Journal, half of the amount will be used for financing clean technology companies. The rest is going to be used in order to make early-stage investments in technology companies such as the group-texting service, GroupMe.

It has been noticed that the clean technology field has hit a few bumps in the road lately, as the investments in the cleantech companies has registered a decrease in the second quarter of the year. Peter Thiel, the co-founder of PayPal, declared, earlier this year, that clean technology was a “disaster”. It has been noticed that the investments in clean technologies have fallen by 10 percent, down to just $1.83 billion this year as compared with the amount of $2.03 billion registered in the same quarter of the previous year.

Solazyme, the algae-based biofuel producer, has raised $227 million from its initial public offering in the month of June, this year, while KiOR, another biofuel maker, has only raised $150 million in its initial public offering in the month of May 2011. Silver Spring Networks, the smart grid developer, stated that it intends to raise only $150 million in its initial public offer which is soon to take place.

Even though these amounts may seem large, when we compare then to the amounts raised by business social networks, such as LinkedIn, which has raised more than $350 million in a round, we can see that they are not that great. LinkedIn has also managed to gain a market cap of almost $10 billion before the moment when the sell-off has managed to wipe out more than $3 billion in value. There are also two other Web 2.0 companies which have recently filled to go public, Groupon and Zynga. From their statements, we know that Groupon intends to gain up to $750 million, while Zynga is thinking about $1 billion.

The fact is that the ascendance of Khosla Venture is quite surprising. At the moment when, in 2004, Khosla took the decision of leaving the storied venture capital firm, Kleiner Perkins Caufield & Byers, in order to create a special venture capital firm which would invest in clean technology start-ups, everybody has been skeptical. The company has sustained almost all the clean technology businesses that had a potential in the budding sector, from biofuels to smart grid companies, and, as we can now see, turned out very well.

Khosla Ventures has also invested in some information tech companies, such as the group texting service, GroupMe. Khosla himself is one of the investors in the payments service Square, while Khosla Ventures also has a partnership with the Designer Fund. As Khosla stated it, those investments focused mainly on the company and on the team rather than on the product. He also added that these investments have not been done in order just to make a deal, but rather because he really believes in the teams.