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After dialing down Boston’s share of its venture investments for a decade, Greylock Partners made it official this week, shifting its headquarters to Silicon Valley. Despite the storied venture capital firm’s long goodbye to Route 128 information technology, Greylock’s general partners and limited partners alike said they remain committed to New England.
“It’s not something the Boston area should wring its hands over,” said Princeton University Investment Co. president Andrew Golden, a Greylock limited partner. “We will be expecting to make a lot of money in Massachusetts venture capital over the coming decade.”
Greylock announced Tuesday that it plans to move its headquarters from its 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.
Partners at Greylock said Waltham-based investing partner Don Sullivan and the firm’s back-office functions will move west, but the firm has no plan to cut the number of Boston-area investing partners or move them from its Waltham office. The firm has eight investing partners, two of them based in Waltham.
Partner Bill Helman, one of the two East Coast partners, said it’s hard to deny that Silicon Valley has moved ahead of Massachusetts in Greylock’s two key verticals — enterprise computing and the Internet. However, one Greylock portfolio company founder said Boston-area VCs’ conservatism is partly to blame for the region’s fall from prominence in the infotech sector. Aras Corp. president and founder Peter Schroer singled out the practice of replacing founders with groomed executives. With that tactic, East Coast VC’s stifle creativity across the venture ecosystem, by discouraging new entrepreneurs and inhibiting growth in the region’s pool of experienced startup executives.
“Greylock pulling out of the area is just another symptom of the exact same problem we’ve been talking about,” said Schroer. “It’s the behavior of the financial community.”
Schroer himself stepped back from a CEO role in 2003, when Greylock and its co-investors, Matrix Partners and Oak Investment Partners, replaced him with Rick Lucier, formerly president and COO at Innoveda. Schroer rejoined Aras after the VCs did not participate in a 2008 recap with angel investors.
Helman acknowledged East Coast investors are more conservative — a tendency he said he has observed in board meetings. But if Boston is going to be more like the Valley, the solution goes beyond the investment community, he said. “(On the West Coast), it’s the entire community that’s focused on entrepreneurial activity. It’s not just the universities and their licensing departments. It’s not just the venture capitalists. It’s the big companies.”
New England, with its strengths in education and health care, could do the same, he said. “You create this reinforcing ‘success begets success’ ecosystem. And that’s what we need to do in other domains. We need to do that in consumer Internet, we need to do that in clean tech.”
Founded in 1965 in Boston, Greylock was among the first pure venture capital firms.
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