Branson, Khosla Back Biofuel Firm

Entrepreneurial luminaries Vinod Khosla and Richard Branson announced that they are joining forces in an effort to develop and produce advanced biofuels.

Khosla, managing partner of Khosla Ventures and co-founder of Sun Microsystems (SUNW Quote), and Branson, founder of Virgin Fuels and other components of a business empire organized under the Virgin brand, are giving their backing to Gevo Inc., a Pasadena-based company seeking to transform biomass into butanol fuel on an industrial scale.

The participating parties declined to divulge the size or the terms of the investment. However, an analyst at Khosla Ventures called it "a significant sum." Executives from Khosla Ventures and Virgin Fuels will join Gevo's board of directors.

Gevo was co-founded in 2005 by Frances Arnold, professor of chemical engineering and biochemistry at the California Institute of Technology, and two of her academic peers. Gevo owns the exclusive rights to all biofuel technology developed in Arnold's Cal Tech research labs.

The retention of Khosla Ventures and Virgin Fuels will provide the small start-up firm with substantial financial and managerial backing.

One-quarter of Khosla Ventures' portfolio is in high-efficiency, low-pollution technology, while Virgin Fuels has made multiple biofuel investments since Branson created the company last year, according to the firm's Web site.

Although one shouldn't underestimate Khosla or Branson's entrepreneurial spirit in a business sector that has enormous profit potential and is getting crowded with major players, they both claim that social and environmental issues are also motivating their interest in biofuels.