Square got a new Venture capitalist

Square inc. announced that venture capitalist Vinod Khosla will join its board of directors. Khosla is already an investor in the mobile payment platform via his venture firm Khosla Ventures, which led Square’s initial financing round and participated in the Series B round last January. Square has raised a total of $37.5 million from Khosla Ventures, First Round Capital, Sequoia Capital and Visa since its founding in February 2009.

Khosla will replace Gideon Yu who recently left Khosla Ventures to join the San Francisco 49ers as Chief Strategy Officer. Yu will continue to angel invest in startups. In fact, sources tell me he has already backed a super stealthy startup called The Usual that lets you order food from your smartphone (yes, this sounds a lot like Jonathan Kaplan’s new startup The Melt which Kaplan debuted at the All Things D conference last week only with a better name, and more to disrupt than grilled cheese sandwiches).

Square was cofounded by Jim McKelvey and Twitter’s busy cofounder (and now chairman and chief product guru) Jack Dorsey, who still runs Square with chief operating officer Keith Rabois, a veteran of PayPal, Yelp and LinkedIn. See my colleague Tomio Geron’s interview with Rabois here.

A board seat at the mobile payments startup is a little off-strategy for Khosla, the Indian-born engineer who started Khosla Ventures in 2004 to invest in what he likes to call his “imprudent science experiments,” everything from wood-based biofuel and new types of batteries, engines and lights to water purification, greener glass and clean cement. As Khosla recently told The Economist: “I am only interested in technologies that have a 90% chance of failure but, if they do succeed, would change the infrastructure of society in some radical way.”

It is still too early to tell whether Square will radically disrupt the way we use our wallets, but the company is certainly off to a solid start. Since launching in February 2009, Square has shipped over 500,000 card readers, processed a million transactions last month alone, and is on target to process $1 billion in payments within the year.And as Rabois told, the company not only plans to transform the payments industry, it also wants to change how small businesses operate and how consumers manage their personal finances.

Khosla can certainly help as it tries to achieve those ends. Before starting Khosla Ventures, Khosla made an early fortune as cofounder of Sun Microsystems. He joined John Doerr at Kleiner Perkins Caufield & Byers in 1996, where he mastered the art of incubating startups.

“Square is thrilled to welcome Vinod to our board. We have worked closely with Khosla Ventures since our inception and Vinod’s expertise, history and input will be a tremendous asset to our company as we continue to grow,” Dorsey said today in the press release.