Someone ought to tell Vinod about the economy.

Forbes reported last night that Khosla is about to announce two new funds: $250 million for seed-stage companies, and a $750 million fund (KVIII) for bigger deals. One has closed and another could close this week.

So who's ponying up the dough? A few months back, CalPERS said it had committed $200 million to a new Khosla fund. If you’re a CA resident, your bankrupt state government is placing pension dollars in Vinod’s hands. I, for one, am pulling for the man.

Khosla made the unusual announcement that he planned to do follow-on rounds for his exisiting portfolio companies—a move that could look like an auto-bailout. Apparently, LPs aren't worried though, thanks to a few considerations: Khosla’s earlier cleantech picks are held in high-esteem, he’s setting up a “conflicts committee” to assure the money goes to quality companies, and the finally-adjusted startup valuations make now a good time to buy a slice.

That “conflicts committee,” which is charged with reviewing investments in which Khosla is the lead, could include people from CalPERS and other LPs—another instance of LPs using their new negotiating power to strong-arm better terms from VCs.

Khosla's ego-checking practices, which include championing his failures and turning down awards make me slightly more comfortable handing him part of our shrinking state funds.

image credit: greenlagirl