Greylock Partners Announces Unique $500 Million Venture to act as Seed Capital Funding for Earliest Stage Startups
Reporter: Stephen J. Williams, Ph.D.
Greylock Partners CEO Reid Hoffman announces a $500 million fund to help the earliest stage startups find capital.
See video below:
https://www.bloomberg.com/multimedia/api/embed/iframe?id=798828e9-7850-4c83-9348-a35d5fad3e1c
https://www.bloomberg.com/news/videos/2021-09-24/intv-sara-guoh-greylock-partners-video
See transcript from Bloomberg.com
00:00This is a lot of money for seed stage deals which is typicallysmaller. Why do you want to make seed such a priority.
00:09So see it has always been a priority for us. We’ve been activeat this stage for a long time and some of our biggest wins
00:15historically have been incubation and seed. So I think companieslike Workday and Palo Alto Networks and more recently abnormal
00:21and Snorkel. And then this year 70 percent of our investmentsyou must mints or seeds before we announce this fund. And so
00:29when we saw this level of opportunity we also want to make surewe had enough funding to really back entrepreneurs and to
00:36support them through their journey and make sure entrepreneursalso know they have different options at the seed for the type
00:41of partners they work with. Now at the seed stage you’re talkingabout companies in their infancy. How early are you investing. I
00:49mean is this ideas on a napkin stage with a couple ofentrepreneurs that you believe in or is it beyond that.
00:58So there definitely is a whole range. We don’t catch everysingle person. Like the day they left their job. Right. But you
01:04know abnormal was to see it in 2018 when it was a slide deck andtwo co-founders. We backed another company recently and self on
01:12first capital. That was a repeat founder we have history with.Similarly no product yet. Just an idea and an early team. And so
01:20the range of when we do see it really depends on when weencounter companies. We do like to get to know people as early
01:26as possible. And sometimes that’s the right time for us to writethe check. Obviously Greylock is a multi-stage venture venture
01:32capital firm and I think founders might have the question here.You know if you give me the seed funding we’ll follow on and
01:38reserves come out of that same bucket. And what could this meanin terms of a longer term relationship with Greylock. What’s the
01:46answer to that. So the first thing I’d start with is seeds forus our core investments. Right. So many firms look at them as
01:54options to then follow on. We look at seeds as investments we’retrying to make money on. We’re building a relationship for the
02:01long term to begin with. Right. So. So I’d start with that thenI’d say it is a third of our fund. So it is a big piece of our
02:09investing. And and you know there are many instances where wethen follow on and invest even more because our conviction
02:16continues or even grows. But the point of us doing seed is notjust a follow on it’s to make that investment. How big is each
02:24deal. I mean would you say that seed is the new series A.I think I think that.
02:33Well let’s see the market data would tell us that round sizesoverall have increased for the same level of progress. And I
02:41think that makes sense right. And the reason being the markethas become a lot smarter at the attractiveness of early stage
02:48technology opportunities. And so great returns in tech venturecapital over many years mean there’s more capital than ever and
02:57people are savvier about software and Internet companies. ButI’d say there is you know I think kind of the noble creature
03:04doesn’t matter so much. We think of it as being the firstinstitutional partner to go to a set of founders. The world is
03:12changing quickly. I mean we’re still in the middle of apandemic. And who would’ve known that you know working from home
03:16was going to be a thing 18 months ago. What are the trends thatyou are most excited about right now that you’re doubling down
03:22on at the seed stage.Yeah. So we invest across the technology spectrum business
03:30consumer. The one you just mentioned in terms of just the seachange of the pandemic in terms of how we do our work together
03:36as one. I’m really excited about but we’ve been we’ve beeninvesting in let’s say just this. There’s a shortage globally
03:44because the pandemic. But even before of human connection andand intimacy and people look for it online. And so we invest in
03:53companies like Dischord and Common ROOM and Promotion that helppeople connect more online. So that’s when we’ll continue to
04:00invest in. And then of course we’re investing across all of yourusual range of SAS social data A.I. etc. and then spending more
04:10and more time in fintech and crypto in particular. Now what arethe potential problems with seed stage. Is that at a certain
04:16point as the company develops maybe they pivot they change. Overtime they could potentially ultimately compete with another one
04:23of your core portfolio companies. How do you manage that.So it’s a good question but it is also something that doesn’t
04:30only happen at the scene and funnily enough Greylock has been aninvestor in several companies that were like great companies
04:37post pivot right. So like first semester and discord and nextdoor after they decided to be what they are today. And so that
04:46you know I’d start with the premise of our our philosophy isthat the company should do what’s best for the company. And we
04:53know our our philosophy is to be fully behind companies and notto go invest in a bunch of competitors in a sector just because
04:59we like this sector. But if that were to happen you know wewould we would just divide those interests within the firm and
05:06like make sure that there’s no information flow and just addressit in a reasonable way. I’ve talked with many of your partners
05:12over the years about investing in more women. And I’m curioushow you look at it as an opportunity to potentially you know
05:22spread the wealth a little bit across more women entrepreneurspeople of color people who historically haven’t gotten a chance
05:29in Silicon Valley and Silicon Valley hasn’t benefited from theirideas.
05:34OK. So I’d say this is an issue that’s near and dear to myheart. We are working on it. Two of the last three founders I
05:40backed are women. One is the seed stage founder. One of thefounders. I backed at the seed stage is Hispanic. But. But I
05:49would say you know one thing I want to make sure is clear. Likeyou want to back great founders from diverse backgrounds across
05:56the spectrum. And like we wouldn’t like do it more in seedbecause seed isn’t important. Because it is important to us.
06:02Right. It’s just across the portfolio. This is a priority.
From TechStartups
Source: https://techstartups.com/2021/09/22/greylock-partners-raises-500-million-invest-seed-stage-startups/
Greylock Partners raises $500 million to invest in seed-stage startups
Nickie LouisePOSTED ON SEPTEMBER 22, 2021
Greylock Partners has raised $500 million to invest exclusively in seed-stage startups. The announcement comes a year after the firm raised $1 billion for its 16th flagship fund to invest in early- and growth-stage tech startups.
Guo and general partner Saam Motamedi said in an interview the fund is part of an expansion of a $1.1 billion fund, which we reported last year, to $1.6 billion, The Information reported. The funding is among the industry’s largest devoted to seed investments, which often represent a startup’s first outside capital.
The pool of funds will give the 56-year-old venture capital firm the ability to write large checks at “lean-in valuations” and emphasize its commitment to early-stage investing, said general partner Sarah Guo. In a thread post on Twitter, Greylock said, “We at @GreylockVC are excited to announce we’ve raised $500M dedicated to seed investing. This is the industry’s largest pool of venture capital dedicated to backing founders at day one.”
Press Release from Grelock
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This is very insightful. There is no doubt that there is the bias you refer to. 42 years ago, when I was postdocing in biochemistry/enzymology before completing my residency in pathology, I knew that there were very influential mambers of the faculty, who also had large programs, and attracted exceptional students. My mentor, it was said (although he was a great writer), could draft a project on toilet paper and call the NIH. It can’t be true, but it was a time in our history preceding a great explosion. It is bizarre for me to read now about eNOS and iNOS, and about CaMKII-á, â, ã, ä – isoenzymes. They were overlooked during the search for the genome, so intermediary metabolism took a back seat. But the work on protein conformation, and on the mechanism of action of enzymes and ligand and coenzyme was just out there, and became more important with the research on signaling pathways. The work on the mechanism of pyridine nucleotide isoenzymes preceded the work by Burton Sobel on the MB isoenzyme in heart. The Vietnam War cut into the funding, and it has actually declined linearly since.
A few years later, I was an Associate Professor at a new Medical School and I submitted a proposal that was reviewed by the Chairman of Pharmacology, who was a former Director of NSF. He thought it was good enough. I was a pathologist and it went to a Biochemistry Review Committee. It was approved, but not funded. The verdict was that I would not be able to carry out the studies needed, and they would have approached it differently. A thousand young investigators are out there now with similar letters. I was told that the Department Chairmen have to build up their faculty. It’s harder now than then. So I filed for and received 3 patents based on my work at the suggestion of my brother-in-law. When I took it to Boehringer-Mannheim, they were actually clueless.