Sep. 1--Attracting other people's millions with visions of expanding his experimental clean-tech portfolio, celebrated venture capitalist Vinod Khosla on Tuesday announced the creation of two new funds exceeding $1 billion -- the largest venture fundraising success of the year.

Khosla Ventures' new war chest includes a $275 million fund dubbed Khosla Ventures Seed to nurture early-stage "green" ideas with investments of about $2 million, and an $800 million fund that would make more diverse investments up to $15 million.

Khosla's fundraising success appears to reflect both his own reputation and an ongoing shakeout in the venture industry, as managers of pension funds and endowments seek new opportunities while reassessing their investment portfolios amid the recession. CalPERS, the California Public Employees Retirement System, invested $60 million in Khosla's seed fund and $200 million in the main fund.

"It's a tremendous signal around the health of clean-tech venture investing coming out of the recession," said Dan Adler, president of the nonprofit California Clean Energy Fund.

Khosla's strategy is also "validation," Adler said, that seed funding is a viable approach to clean-tech innovation. Some venture firms have steered clear of such investments, wary about the potential payoff.

CalPERS spokesman Clark McKinley said Khosla Ventures' diversity and ambition attracted its investment: "It goes beyond alternative energy to

materials, water and other areas. There's high risk but high return. Some companies won't pan out but there could be great returns if he's able to create the next Exxon of the alternative energy field or the next great concrete company."

In a press release, Khosla said: "The broader capital base and team allow us to accelerate what we do, which I call venture assistance -- we assist and mentor entrepreneurs. We will continue to foster high-risk technology innovation and unproven but high-impact science experiments, now with greater resources."

Khosla Ventures, which already included five other partners, also announced Tuesday that former Facebook chief financial officer Gideon Yu and former CMEA clean-tech specialist Jim Kim joined the firm as partners.

The firm has completed a transition from Khosla's personal investment vehicle into a conventional Sand Hill Road operation. But Khosla's approach, and his ardor for the clean-tech sector, is not conventional.