Vinod Khosla, the founder of Khosla Ventures and co-founder of Sun Microsystems has raised $1.1 billion for his venture firm.  About $800 million will be going to Khosla Ventures III and $275 million will go to a new seed fund.

Altogether $1.1 billion is the largest that a venture firm has raised in the last 10 years.  This is also the first time that Khosla Ventures raised money externally.  One of the biggest partners in this round of funding is CALPERS (the California state employees retirement fund).

The previous rounds of Khosla Ventures were provided by Vinod Khosla himself.  Khosla founded the venture firm in 2004 and now the company has 8 partners.  Gideon Yu was recently hired as a General Partner at Khosla.  Before that he was the CFO of Facebook.

Gideon Yu is the former chief financial officer at Facebook.  In late March, Yu had suddenly quit and it was uncertain where he was headed to next.  According to a source with TechCrunch, Yu has joined Khosla Ventures as a General Partner.

Yu was previously an SVP in Finance and Yahoo! and he was also the former CFO of YouTube.  Before joining Khosla, Yu worked for a short while at Sequoia Capital.  He was one of the main reasons why Google bought YouTube for $1.65 billion.

Khosla recently raised $1 billion in a fund to invest in various startups in the mobile, Internet, science, and clean-tech sectors.

After IBM recently backed out of making a deal with Sun, Oracle stepped up to the plate and bought out the Java-making company for an astonishing $7.4 billion.  IBM’s offer was about $6.5 billion.

This will give Oracle the opportunity to become even more competitive against IT firms such as Hewlett-Packard, IBM, SAP, etc.  Sun also holds the assets to two of the most impressive pieces of software Java and MySQL.

Sun Microsystems bought MySQL for $1 billion in January 2008.

“To me, this proposed acquisition totally redefines the industry,” wrote Sun President and CEO Jonathan I. Schwartz in an e-mail to Sun employees.  “Let me assure you [Oracle is] single minded in [its] focus on the one asset that doesn’t appear in our financial statements: our people.”

Oracle will be paying $9.50 per share for common stock in Sun, but the agreement is subject to the Justice Department’s approval.   Sun was founded by Vinod Khosla, Andy Bechtolsheim, and Scott McNealy. Oracle was co-founded by Lawrence (Larry) Ellison.

“Java is the single most important software we’ve ever acquired,” stated Ellison in a conference call. “With the acquisition of Sun, Oracle is now able to make all of the pieces of the technology stack fit together and work well.”