Greylock Hits Middle Age, Accomplished

While most firms are struggling to survive, one if the oldest venture firms in the world is continuing to innovate and move forward. Maybe the firm has taken notes from some of its best startup’s, like Facebook (2^nd round investor), and continued to change and adapt rather than sticking with the exact same philosophies.

Greylock recently collected a $575 million 13th fund in a matter of weeks, $75 million more than it initially targeted. Additionally, the firm said it didn’t lose any of its blue-chip limited partners, even though many such investors are reeling from massive portfolio losses.  This serves as evidence that the 44 year-old firm is just as attractive as it was in the boom of the 90’s.

Not only did the 13^th fund come in as quick and painless as ever, but they were able to pick up a star for their 9^th partner, Reid Hoffman, founder and chairman of LinkedIn.  The relationship began as a investment in the young startup company a few years ago. Now as Hoffman branches out into other ventures.  The partners, largely based in California, convinced him it was better to invest through a firms as opposed to angel investing by himself. — I guess it worked.

So why has this firm been successful for so long while others in the industry continue to struggle? Several reasons come to mind, one being the relationships they build with their Limited Partners in order facilitate more investment. Greylock meets with its LP’s twice as much as most other firms do, creating better relationships and in turn more investment.

Greylock has proved it can adapt nimbly to a changing investment climate. Once an East Coast-centric firm with significant communications investments, the firm has gradually built up its West Coast practice and added Web-based software and consumer Internet companies to its repertoire. (My web-based software startup Uvestor.com really likes that)

At the same time making sure it is attracting top talent in these sectors to assure its success. Now 7 of the 9 partners are WC based….Speaking of West Coast based, younger firms are beginning to move away from the “return the fund” strategy, and judging companies based on potential of success rather then a targeted return rate that will produce the total value of the fund raised (sometimes $300M).  Firms like First Round Capital and True Ventures are exemplifying this strategy.  This is not meant to be better, but is a good thing for entrepreneurs, as more small companies are getting noticed and funded.