Despite talk of institutional over-allocation to venture capital and a shortage of quality dealflow, Greylock yesterday announced that it recently held a final close on its first $1 billion investment vehicle. What is perhaps most intriguing about the achievement, however, is that the 35-year-old VC veteran can’t quite understand why closing on a fund of that size in this down-market environment is such a big deal.
“When you have a group of limited [partners] that’s been so supportive, [fund-raising] is more of a pro forma exercise we go through,” said Bill Helman, a general partner with Greylock. “It’s interesting to see the [media and market] reaction. It’s not something we had planned on.”
He added that Greylock had no need to join the growing list of venture firms which have recently found themselves either removing their funds from market or, in some cases, actually giving uncommitted capital back to limited partners.
“The firms who have chosen to forego fund-raising were saying, ?We need some time to focus on our portfolio to get things together,” he said. “[We differ in that] Greylock has constantly focused on its portfolio.”
Also unlike some other partnerships, Greylock?s fund-raising process didn?t involve road shows or a formal fund-raising period. If anything, it went about capturing capital the old-fashioned way — merely by picking up the phone and calling on a few trusted benefactors.
“Since 1965, every one of our funds has seen prior investors recommitting,” Helman said.
“We send around a document, make some phone calls, people make allocations, we get some documents and it?s done.”
That philosophy may explain why Greylock spent just three weeks shopping its latest investment vehicle to its LPs. In addition to its previous backers, which Helman declined to name, three new institutional investors signed on to Fund XI, as well as a slew of tech CEOs, mostly from start-up firms Greylock has funded in the past.
Also like its previous funds, Greylock XI?s average investment size will likely range from $5 million to $10 million over the life of its portfolio companies. The new fund is expected to amass about 80 early-stage technology plays over the next four years, and its resources will be concentrated primarily in the enterprise software and communications infrastructure and components spaces. Most of its investments will be U.S.-based.
As Greylock has only recently made its first capital call for its newest fund, it will likely be a while yet before it starts looking at potential deal flow, Helman noted, as Greylock has plenty of dry powder left in its previous funds.
In the past, Greylock has invested in such high-performance players as AscendCommunications, Internet Security Systems, Red Hat and Tellabs.
Greylock XI will be managed by nine general partners in the firm?s offices in San Mateo, Calif., and Boston. The firm currently has $2.2.billion under management.
Contact Robyn Kurdek.