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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