Greylock Partners is one of the oldest and most successful venture capital firms ever, having invested in a number of tech’s most successful and largest firms including Facebook, Workday, Palo Alto Networks, and LinkedIn to name just a few.
Greylock is also among the most prolific investors in so-called “unicorns” — with 10 billion-dollar private companies in its portfolio today, 4 of which were early-stage investments highlighting the firm’s prescience in making early bets.
Using CB Insights data and visualizations, we dive into the financing strategy, investing pace, investment syndication patterns, and more in this “teardown” of Greylock Partners.
- Where’s the data & viz from? 100% of the visualizations and data you see in this teardown are directly from the CB Insights platform’s Investor Analytics tool.
- What’s a teardown? A product teardown is the act of disassembling a product to understand its parts, functionality, etc. An investor teardown is analogous in that we’re trying to understand a firm by analyzing data around their financing strategy, investment thesis, key people, exit history, investment syndicates, and more.
Financing activity — deal pace slows in 2015
Greylock has slowed its pace of investments in 2015 having completed 43% fewer deals than the same period last year. A slowdown that’s primarily attributable to a decline in seed activity.
However, given the firm’s fund size (Greylock XIV was $1 billion), it remains among the more active VC funds investing across both the consumer and enterprise realms. Below are some of Greylock’s notable recent bets.
- Greylock led a $10M investment into Operator, an app founded by Robin Chan and Garrett Camp (the latter is a co-founder of both StumbleUpon and Uber) that connects people with services & businesses easily with their mobile phone.
- Greylock led a $14M Series B investment in live video-streaming app Meerkat.
- Xapo, the bitcoin wallet and vault, took a $20M investment co-led by Greylock and Index Ventures last July, which bumped the company’s Series A to $40M.
- Avi Networks, a cloud application delivery platform, raised $33M from Greylock, Lightspeed Venture Partners, and Menlo Ventures in December.
- Greylock co-led a $77M investment into former Hulu CEO Jason Kilar’s short-form video platform Vessel in 2014. Less than a year later, Vessel added $57.5M from Institutional Venture Partners and Comcast Ventures in April 2015.
Below is a graph of Greylock’s monthly investment activity (deals and funding participation) over time, taken from their profile on CB Insights.
Exit activity — All M&A in 2015
Greylock has notched 12 exits in 2015 year-to-date — all of which have come in the form of acquisitions amid the well-publicized IPO drought for VC-backed companies. Here are some of its most notable exits since the start of last year.
- OpenDNS was acquired by Cisco for $635M in June. Greylock was a Series A investor in the security firm in 2009.
- TellApart was acquired by Twitter for $532M April. The ad tech startup took a Series A investment from Greylock in 2010.
- Coupons.com went public at a $1.16B valuation. Greylock invested in the digital promotions site via a secondary transaction in 2011.
The scatterplot below highlights Greylock’s exits over time (those with disclosed valuations).
- David Sze joined Greylock in 2000 after serving as senior vice president of product strategy at Excite. Sze is widely credited for leading Greylock’s investment in Facebook in 2006 as well as its investments in LinkedIn and Pandora. Sze currently serves on the boards of Nextdoor, Medium, and ToyTalk, among others.
- Reid Hoffman is the executive chairman at LinkedIn, which he co-founded in 2003. Hoffman joined Greylock in 2009 and currently serves on the boards of Wrapp, Xapo, and Edmodo.
- Josh Elman worked on product and engineering at three of the biggest consumer tech stories in recent years, Facebook, Twitter and LinkedIn, before joining Greylock in 2011. Elman currently serves on the boards of Medium, Meerkat, Operator, and Super.
- Asheem Chandna joined Greylock in 2003 where he invests in enterprise tech after serving as vice president of business development and product management at Check Point Software. Chandna currently serves on the boards of Rubrik, Avi Networks, Skyhigh Networks, Delphix, AppDynamics, and Aquantia and has deep domain knowledge in areas like cybersecurity.
- Simon Rothman previously served as an executive at eBay before joining Greylock in 2011 where he leads Greylock’s $100M commitment to marketplace investments. Rothman serves on the boards of Sprig and EatWith.
Geographic strategy — Doubling down on California
Within the U.S., California took nearly all deals by Greylock over the last four quarters including Meerkat, Nextdoor, Docker, and Product Hunt among others. Just two deals went to Massachusetts, where Greylock invested in HourlyNerd and WiGo.
Greylock pursued more geographically diverse investments in the previous four quarters — when the firm completed deals in Washington state, New York, Washington DC, and Utah. The latter two were due to investments in SmartThings (acquired by Samsung) and Domo Technologies, a unicorn now valued at $2B.
Stage strategy — Seed/Series A take nearly half of deals
Over the last two years, Greylock has been an active seed investor. The seed stage accounted for nearly 27% of Greylock’s new and follow-on deals although as mentioned above, the seed activity has declined as of late. Series A deals took one-fifth of Greylock’s deals over the period, while Series B and Series C deals combined to take nearly 28% of deal activity.
New vs. follow-on investment trends — Fewer new deals
The chart below from CB Insights’ Investor Analytics tool shows the proportion of Greylock’s new investments vs. follow-on investments in each quarter for the past two years. Overall, Greylock, given its fund size, continues to do new deals and invest in follow-on rounds of companies which are showing momentum. Greylock did fewer new deals in the first half of 2015 compared to the same period in 2014, when the firm completed 18 first-time deals including Sprig, Docker, Medium, Vessel, and Grand Rounds.
Deal size trends
Greylock’s median deal size has swung from as low as $8M to as high as $38M in recent quarters largely due to participation in larger follow-on deals. These include recent participation in Docker’s $95M Series D, Sprig’s $45M Series B, and Sumo Logic‘s $80M Series E.
A screenshot from the Investor Analytics tab on CB Insights showing the deal size trends of Greylock financings by quarter over time is below.
Investment syndicate — SV Angel, A16Z are most frequent co-investors
SV Angel is the most frequent co-investor with Greylock over time and the two have co-invested in 32 companies together, across 34 rounds. Andreessen Horowitz has emerged as Greylock’s second most frequent co-investor, with the two sharing investments in 25 companies including Okta, Tidemark, and Lookout among others. Y Combinator was the top feeder of dealflow to Greylock, followed by SV Angel, and Accel.
T. Rowe Price, which has led the mutual fund charge into VC-backed tech companies, is among the most frequent investors after Greylock with seven companies over time including Dropbox, Cloudera, AirBnB, and Redfin. This is consistent with what the data has revealed about mutual fund investors in that they prefer to invest in brand name VCs with long track records of success — a description that fits Greylock.
The Investment Syndicate dashboard for Greylock below highlights and ranks top dealflow sources, co-investors, and follow-on investors.
- 100% of the visualizations in this teardown are from Investor Analytics. No Microsoft Excel necessary.
- Visualizations on the CB Insights platform are all interactive so you can click and see underlying transaction details.
- Visit Greylock’s profile to check out these visualizations on your own.
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