Greylock Nearly Doubles Fund to Chase Late Stage Deals

Greylock Partners, an investor in Groupon, reopened its current $575 million fund that it closed in 2009 and raised the cap to $1 billion. This will allow the Menlo Park, Calif.-based firm to invest as much as $25 million to $200 million in promising companies and begin an initiative to focus on larger stage financings of “breakout consumer Internet and enterprise companies.”

The firm in January took part in the $950 million financing of Groupon, which also included Kleiner Perkins Caufield & Byers and Andreessen Horowitz.

Greylock is calling the expanded fund Greylock Growth Fund, although the firm will invest the pool through its eighth vehicle, which also backs seed stage deals.

Greylock’s expanded fund is not the only one to recently close and to go after late stage deals. Last fall, Institutional Venture Partners raised $750 million to invest in high-growth tech and media companies, with a focus on companies that IVP believes can provide an exit in three to five years.

In addition, Andreessen Horowitz late last year closed a $650 million second fund and recently bought a pile of Twitter stock in the secondary market. Sequoia Capital added a $930 million growth fund as long ago as 2008.

Greylock reported that its fund expansion came from existing LPs and was oversubscribed.

“Greylock Growth is the next phase of an explicit later stage strategy put in place five years ago with our initial investment in Facebook,” David Sze, partner at Greylock and head of the growth initiative, said in a prepared release. “As the Internet has evolved it has become increasingly clear that continuous product innovation is critical to a company’s success, whether it is a seed stage startup or an independent, industry-leading business.”

Since Greylock’s initial Facebook investment in early 2006, about 40% of the firm’s dollars have gone toward later stage companies. In addition to Groupon and Facebook, its portfolio includes Zipcar and Pandora Media, both of which are in registration for IPOs. —VCJ Staff