StepOne Blog

Vinod Khosla has recently been reported to be closing $1B in new funding for his firm, Khosla Ventures. The announcement runs counter to months of reporting about the difficulty in fundraising found in the VC community. Adding to the air of confidence is the rumor that $200M of the fundraising has come from CalPERS, the nation’s largest public pension fund.

The money has been divided into two  – $250M will be set aside for seed-stage investing while $750M will go towards late-stage investments. The large commitment to late-stage investments comes as little surprise to those following Khosla’s investments: a big jump into cleantech has meant that the firm is betting on riskier businesses that will likely require more capital to become profitable. The $250M for seed investments, on the other hand, demonstrates the funds commitment to early-stage Venture Capital at the same time that many have been questioning the viability of the VC model.

The vote of fundraising confidence reflects StepOne’s view that venture capital is certainly not dead in the valley. While both investing and fundraising have been affected dramatically by the recession, money will continue to flow through Silicon Valley, supporting the best ideas and entrepreneurs.