Greylock beats target, adds Hoffman to roster

Every so often there’s one venture firm that makes everyone else in the industry seem like whiners.

This year is shaping up to be one of the worst for venture fund-raising in recent memory, with just 87 firms collecting $8.3 billion through the first three quarters of 2009. That’s down from about $25 billion raised during the first three quarters of 2008, according to the National Venture Capital Association, based on data from Thomson Reuters (publisher of PE Week),.

But then there are the few that manage not only to raise funds, but actually have to make room for even more investors.

The most recent VC firm to make fund-raising look easy is Greylock Partners, which had to open an extra $75 million in its $575 million 13th fund for investors that could not get enough. The fund-raising process, which can take anywhere from months to years for most venture firms in the face of an economic downturn, took all of six weeks for Greylock.

“Investors need to be particularly selective about the funds in which they invest,” says Andrew Golden, president of Greylock limited partner Princeton University Investment Co. Greylock is one of the few firms the endowment chose to make commitments to this year, Golden says.

In fact, University endowments have played a large role in Greylock’s funding over the years. Limited partners in previous funds include the Dartmouth College Endowment, the Duke Management Company, the Harvard Management Co., the Massachusetts Institute of Technology Endowment Arm, the Stanford Management Company and Yale University Investments, according to records kept by market research firm CapitalIQ.

“We are thankful to count among our investors some of the most sophisticated and respected university endowments and family foundations,” says Greylock Partner Bill Helman.

It is unclear if Stanford and Harvard, which have been selling their stakes in well-known VC funds on the secondary market, came back for Greylock XIII. The firm declined to provide any information about its limited partners.

The firm has also turned to fund-of-funds in the past, such as HRJ Capital, Legacy Ventures and Northgate Capital Group, records show. The firm declined to comment on whether fund of funds were part of its latest vehicle.

However, although Greylock’s fund-raising was fast, the firm slowed its pace of investment this year. So far this year, it has put $128.3 million into 22 deals so far this year, down from $155.6 million it put into 43 deals during 2008, according to data from Thomson Reuters (publisher of PE Week).

Still, the firm was involved in a number of large deals. It backed software-as-a-service startup Workday in a $75 million Series E round in April; security startup Palo Alto Networks in a $36.6 million expansion round in April; online radio station Pandora Media in a $35 million round in July; and consumer finance startup Wonga in a $22.5 million round in July.

In closing the fund, Greylock added serial entrepreneur Reid Hoffman to its ranks as a partner on its new fund. Hoffman was previously vice president at PayPal before co-founding professional networking website LinkedIn, a Greylock-backed startup. Hoffman will retain his executive chairman role at LinkedIn.

Hoffman has been involved with several venture firms. He is a special advisor to the fbFund, a co-operative effort between Facebook, the Founders Fund and Accel Partners. He also advises New Cycle Capital, a socially responsible venture fund focused on early stage opportunities and backed by The Rappaport Family Foundation.

It is unclear at this time if Hoffman will retain these advisory roles. He was unavailable for comment and a Greylock spokesperson said he was traveling for the next several weeks. —Alexander Haislip