Greylock Raises $1.5 Billion Fund for Early Stage Startups

Greylock, one of the oldest venture firms in Silicon Valley, isn’t expecting the artificial intelligence race to slow down anytime soon. The 61-year-old, San Francisco-based firm has raised its eighteenth fund, a $1.5 billion vehicle.

“What prior tech waves have shown us is that a few years after the start of a wave is when the largest companies get built,” said Greylock managing partner Asheem Chandna. “Despite what might have happened in the last few years, the next trillion-dollar companies are actually going to get started in the period ahead.”

The new fund will mostly be invested into the first financing of early stage startups, with a portion of capital reserved for growth stage checks. Over the past 15 years, Greylock has generally raised $1 billion hauls. Chandna says the larger fund size is a reflection of the massive round sizes of the AI boom. Though it’s just shy of the $1.6 billion haul that Greylock put together in 2021, the fresh financing will give the firm more cash to back a range of AI seed-stage startups.

“Historically the largest spend for a company was people spend. Today going forward it is a combination of human spend and token spend,” Chandna said, referring to the units of measurement for AI computing.

The firm is relatively concentrated: Each partner makes only one to two new investments per year, stretching each fund to a three-year investment cycle. The challenge, then, is if the 10-person partnership that Greylock has can keep a concentrated early stage practice relevant in the age of AI – where startups are raising rounds faster than ever before, and venture firms are aggressively expanding their checkbooks to back more startups across the ecosystem.

Saam Motamedi, managing director at Greylock who now leads the firm with Chandna, said that staying focused is an advantage. “We don’t spend our time on the podcast circuit,” Motamedi said. “We don’t need to be in every company, we need to be in great companies.”

Instead of increasing the number of checks the firm writes, Greylock is focused on growing its initial investments: Motamedi says that the firm does write $4 million checks, but that it’s not unusual for them to back a company with a first amount of $25 million or $30 million. Chandna says that the firm often will own more than 20% of startups that they lead the first institution round for, even in competitive financing.

“We don’t want capital to be a constraint,” Motamedi said.

Greylock is best known for successful early bets in cybersecurity companies like Palo Alto Networks Inc. and, more recently, Rubrik Inc., a company focused on bringing more security to the data management space. Both investments went public, and represented significant returns for the firm, which counts nonprofits and universities as its main limited partners.

Within the AI world, Greylock’s largest exits thus far have been Modular, an AI compute startup that Qualcomm is set to acquire for $3.9 billion, and Chronosphere, which was acquired in January by Palo Alto Networks for $3.35 billion.

One of Greylock’s most notable AI bets is on Baseten, a San Francisco-based AI infrastructure company that hit a $13 billion valuation last month. Greylock first invested when the company was valued at less than $20 million, according to a person familiar with the matter.

With its new funds, Greylock will invest across infrastructure, cybersecurity and application-layer companies. The partnership also plans to spend more time in robotics, biotechnology and real-world infrastructure efforts around data centers and power, which would be a newer focus.

Last year, Greylock broke from tradition to write a check into one of the highest privately valued companies of all time. It backed Anthropic PBC in its Series F, which valued the business at a $183 billion valuation. Greylock says that it was the largest investment, in terms of dollars deployed, in the firm’s history.

While Anthropic’s valuation has soared since to $965 billion, Greylock isn’t planning to raise an opportunities fund or later stage fund any time soon, bucking the trend of early stage funds creating separate vehicles to double down on its winners. A portion of the new funding will be used to back later stage companies, but early stage will remain the priority.

“We don’t want to force ourselves to have to deploy,” said Motamedi. “It’s much more bottoms-up.”