Tuesday, May 19, 2009

Boston's Greylock Partners moves HQ to Silicon Valley

By Galen Moore

Article updated as of Tuesday, May 19, 2009 at 12:48 p.m.

Venture capital firm Greylock Partners announced today that it plans to move its headquarters from its current location in Waltham to a new office being built in Menlo Park, Calif. The firm said it will also add partners and other positions to the California office.

Partner David Sze said the company does not plan to cut investing partners or move them from its Waltham office. Administrative partner Don Sullivan and the firm’s back office functions will move West, said Sze, who is a Boston native but joined Greylock’s Silicon Valley office in 2000.

Founded in 1965 in Boston, Greylock was among the first pure venture capital firms. Pioneering venture capitalist Georges Doriot helped establish American Research & Development after World War II, which ultimately led to the development of Greylock Partners.

Partner Bill Helman, who joined Greylock in 1984, said opportunities in enterprise software and Internet entrepreneurship have grown in Silicon Valley over the last decade, far surpassing those in Boston. “Fundamentally, Silicon Valley has created a culture of ‘nothing is impossible.’ It’s sort of back to that frontier culture of San Francisco: ‘Nothing is impossible. Come here to pursue your dreams,’” Helman said. “Boston’s lost some of that. It doesn’t mean there aren’t people who have some of that in Boston. There are.”

Helman said successful Internet companies like Ebay, Google, Paypal and YouTube have made the West Coast a magnet for new entrepreneurs. “Success begets success,” he said. As a result, Greylock’s investment focus has shifted geographies. Ten years ago, the company’s Waltham office was dominant, he said. Now, three quarters of the firm’s investments come out of California.

Sze downplayed the company’s move of its nominal headquarters, saying what Greylock is doing is no different from other Boston-area firms that send investors west. “We see a lot of Boston firms sending their guys out here on trips,” he said. “Those efforts, I don’t think any of them have succeeded.” In contrast, Greylock has “cracked the top three to five firms” on the West Coast, he said.

In addition to its Boston office, Greylock Partners has an existing office in San Mateo, Calif., as well as offices in Israel and India. The firm will continue to operate an office in the Boston area and will continue to invest in local companies, according to officials in a company statement.

Earlier this year, Mass High Tech reported on Greylock’s backing of California firms Auditude, an online video and ad firm, and Oodle Inc., an online classified ads aggregator.

At the same time, recent reports of fundings for local companies that were previously backed by Greylock Partners showed that they did not receive funding from the firm in their newest rounds, including Lumigent Technologies Inc.’s recap financing round of $6 million, announced in January.

In January, Greylock portfolio company Mazu Networks Inc. was sold at a steep loss to investors. The company, a Cambridge-based provider of network behavior analysis systems, went to San Francisco-based Riverbed Technology Inc. for $25 million cash, after investors put in a combined $42 million. However, Sze said Greylock made money on the deal.
 
Locally, Greylock Partners has invested in Red Hat, Constant Contact, OutlookSoft and ZipCar.