Wednesday, 15 June 2011

VC Factcheet: GREYLOCK PARTNERS

Company Summary and History
Greylock Partners have been in operation since 1965. They have funded and successfully built hundreds of companies, more than 150 of those have gone on to IPOs and more than 100 have achieved successful M & A events . Since 1965 they have raised 13 funds in the form of limited partnerships, the latest of which (Greylock XIII) was expanded to 1 billion USD in March 2011 . Greylock established their presence as key players in the emerging Web 2.0 landscape with investments in companies that have become household names. Greylock Partners operate out of the Bay Area, Boston, China, India and Israel.

Key People
Reid Hoffman: Partner who first joined the firm in 2009. He co-founded and is the biggest shareholder in LinkedIn and prior to that he was executive vice president of Paypal. An angel investor in over 80 start-ups, including: Facebook, Zynga, Digg, Flickr (sold to Yahoo), Last.FM (sold to CBS). At Greylock he has led the firm’s investments in Groupon, Shopkick and Airbnb. He holds a Bachelors degree in Symbolic Systems from Stanford University graduating with a distinction, and a Master’s degree in Philosophy from Oxford University, where he was a Marshall Scholar. He was also listed as 3rd on Forbes 2011 Midas List of top technology investors.

David Sze: Partner who first joined Greylock Partners in 2000. Reflecting Greylock Partners involvement in the Web 2.0 scene, Mr Sze was listed as 9th on Forbes 2011 Midas List. He led Greylock's investments in Facebook (in early 2006), LinkedIn, Pandora and Digg, and sits on the boards of all four companies. Mr Sze holds a BA from Yale University and a MBA from Stanford University.

Aneel Bhusri: Partner who joined the firm in 1999. At Greylock he has recouped substantial returns through the acquisition of PolyServe for 200 million USD by Hewlett Packard in 2007. In the same year, as chairman, he took backup-device maker Data Domain public before it sold to EMC for 2.4 billion USD in 2009. Completing the Greylock trio, he was listed as 15th in the Forbes 2011 Midas List. Mr Bhusri possesses a MBA from Stanford University and a bachelor of science and arts in electrical engineering and economics from Brown University.

High Profile Deals
LinkedIn: The premier business social networking site became publicly listed, in May 2011. Greylock Partners lead the Series B funding round, injecting 10 million USD into the company in 2004. They were also involved in the Series D funding round of 53 million USD in 2008. When the company completed its IPO and publicly listed on the 19th May 2011 it was valued at 8.5 billion USD, thus giving Greylock Partners an estimated stake worth 1.32 billion USD.

Facebook: Greylock Partners were relatively early investors in the company, leading the Series B funding round of 27.5 million USD in 2006. Initially it was seen as a potentially risky manoeuvre in light of the company’s relative immaturity and the then, perceived, inflated valuation of around 500 million USD. In hindsight, due to Facebook’s astronomical success, has proved lucrative. This established Greylock’s position in Silicon Valley as a key investor in Web 2.0 companies.

Groupon: Greylock’s investment in Groupon was somewhat small, contributing tens of millions of dollars to a Series D funding round of 950 million USD. This deal however positions Greylock Partners as one of only two Venture Capitalists (Andreessen Horowitz’s Marc Andreessen being the other) who have have invested in four (Facebook, LinkedIn, Groupon and Zynga through Reid Hoffman) of five (the remaining being Twitter) internet start-ups with valuations greater than 1 billion USD.

Requirement for Capital Investment in Start-ups
Greylock prefer capital-efficient businesses where high barriers to entry can be constructed. For example, high-value sectors such as consumer technology and the internet, enterprise information technology and communications. Though traditionally associated with early stage investments, they are active at all levels of the start-up spectrum, for example investing in seed stage companies through the Greylock Discovery Fund, early stage companies through Greylock XIII and late stage companies through Greylock Growth.

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