Why did Greylock set his new fund at $1.5 billion when he could have raised more

While many large venture firms continue to raise mega-funds, Greylock Ventures, one of Silicon Valley’s oldest and most established venture firms, is deliberately bucking the trend of ballooning fund sizes.

The 61-year-old firm announced Tuesday that it has raised its 18th fund, valued at $1.5 billion. The figure is 50% higher than its predecessor 1 billion dollars Compounded as of 2023, it roughly matches the capital the company raised across seed and flagship funds during the pandemic. However, Greylock partner Sam Motamedi told TechCrunch that Greylock could have easily raised “a multiple” of that number, suggesting that the partnership decided that restraint was the better course at a time when fund volumes across the industry continue to rise.

“Our mission is to be the most important partner to the most important entrepreneurs,” Motamedi said. The company is proud to introduce its portfolio companies to senior engineers and potential clients, as it did with Baseten, an AI infrastructure startup now valued at $13 billion, after its first Series A investment in 2022. But Motamedi said Greylock can only offer this level of support by keeping the number of companies it backs small.

The company’s 10 partners make only one or two investments each year, a pace that Al-Mutamadi said would result in approximately 25 portfolio companies joining the fund.

Like previous funds, the new fund will primarily focus on incubating early-stage companies and leading seed and Series A funding rounds. This is where Greylock built his reputation; The company has a track record of building companies from scratch, most notably security giant Palo Alto Networks, which launched inside Greylock’s offices 21 years ago, and email security startup Abnormal, which Greylock incubated in 2018 and last evaluated. In the amount of $5.1 billion.

However, Greylock is not strictly committed to early-stage deals. Motamedi said he would also support high-potential, later-stage companies even if they “missed them early on.” The firm’s 17th fund included three growth-stage bets: Anthropic, Revolut and Wiz.

The company made its first investment in Anthropic when the AI ​​company raised a $183 billion Series F. “It is the largest investment in the company’s history,” Motamedi said.

Motamedi estimates that roughly 15% of the new fund will be distributed to later-stage startups, but stresses that Greylock remains primarily an early-stage investor.

As evidence of this, Al-Mutamadi said that when partners meet every Monday to review their investment pipeline, the agenda consists primarily of people’s names rather than company names.

“We get to know people even before they start a company. It’s really a bet on the person,” he said. “Often the company doesn’t even exist.”