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Report: Khosla Ventures enlists Calpers for clean tech

Will a $640 million capital infusion bridge the "funding gap" for energy start-ups?

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.

Calpers has already created a $400 million clean-tech fund which launched last year.

Vinod Khosla, head of Khosla Ventures. Martin LaMonica/CNET

But a capital commitment the size of $640 million to a venture capital fund is significant as it can provide the capital required to scale up energy industry start-ups.

Ethanol companies, for example, need hundreds of millions of dollars to prove out their technologies at a commercial scale.

Khosla Ventures has invested in a number of ethanol companies including Range Fuels and Mascoma, which both require money to build beyond their initial pilot plants.

Billions of dollars have gone into clean-tech start-ups. But many industry observers expect many of those to falter in the face of a "funding gap," or "Valley of Death," between technology development and commercial production.

Until now, Khosla Ventures has been funded by family money from billionaire Vinod Khosla.