Greylock raises $575m
Fund to focus on software; LinkedIn cofounder joins venture capital company
Greylock Partners, a pioneer of Boston venture capital firms, has accomplished another feat during the current economic downturn: raising money for new investments.
The 44-year-old firm said yesterday it has raised $575 million for a new investment fund that will primarily focus on early-stage software companies. Greylock also said Reid Hoffman, cofounder of the business networking site LinkedIn, is joining the firm as an investment partner.
“This will be a great platform to invest in good companies,’’ said Hoffman, who will remain executive chairman of LinkedIn. “I think a recession is the right time to start and invest in new companies. You get down to the people who are really committed to making their stuff happen.’’
Greylock, which shifted its headquarters to Silicon Valley last spring, is also now moving from its Waltham offices to new digs in Harvard Square. “Since science and technology play such an important role for us, being closer to MIT and Harvard is going to be a great thing,’’ said Bill Helman, a Greylock partner.
The firm’s new fund is its first in four years and is being launched at a time when many other venture capital firms are struggling to raise money. Fund-raising by venture firms in the third quarter of 2009 slid to the lowest level in 15 years, when just 17 companies raised $1.5 billion, according to Thomson Reuters. By comparison, 63 venture firms raised $8.5 billion in the third quarter of 2008.
In Massachusetts, one of two centers in the US for venture capital and the high-tech start-ups they back, only two firms raised new funds in the three months that ended Sept. 30. Excel Venture Management of Boston and Longworth Venture Partners of Cambridge pulled in a total of $147.5 million from investors.
In recent years, Greylock has focused its investments on social networking companies such as Facebook and digg. It also invested in LinkedIn, where Hoffman and Greylock partner David Sze serve on the board of directors. In earlier years, Greylock invested in Ascend Communications, Continental Cable,
Despite the cautious investing environment, Sze said the new fund was over-subscribed, causing the firm to increase the amount to $575 million from an original cap of $500 million.
Sze said Greylock will continue to focus on young firms, but also is looking for growing companies it believes have been undervalued in the market.
Casey Ross can be reached at cross@globe.com. 
