Tuesday, May 19, 2009

New HQ for Greylock Partners: Sand Hill Road...Menlo Park... Calif.

Just got off the phone with Bill Helman of Greylock Partners, who shed some light on the story everyone is talking (and Tweeting) about this morning: Greylock is moving its home office from Waltham to Menlo Park.

Sticking around in Waltham will be two partners: Helman and Bill Kaiser. (They also get occasional visits from Greylock chairman Henry McCance.)

Helman said the decision was made by the partners over the past month. "We looked at the data, looked at our returns, and looked at competitive data, to the extent that you can get it," he said. "Then, of course, we get paid to make judgments, so there's a judgment that gets made on top of that. We asked, is this cyclical or secular -- and we came down on the side that this is more of a secular shift than a cyclical one."

"This doesn't mean that Boston is a zero," he continued. "Boston is a terrific location, and there will continue to be success here. But the big change was moving the back office [to California, and deciding to add new partners there.] I have an emotional attachment to Boston. I live in Cambridge. I love Harvard, and I love MIT. But we have a responsibility to our limited partners."

Greylock only has a handful of current portfolio companies in the Boston area right now. They include Zipcar, Reveal Imaging, Concert Pharmaceuticals, AVEO, and Ounce Labs. I called Roger Tung, chief executive of Concert, this morning, and he hadn't yet heard about the news, though he'd had lunch with Helman (who serves on his board) a few weeks ago.

"They told me they're getting new space on Sand Hill Road, but I just assumed they were moving offices there," Tung said.

Helman said the plan was not to discuss the change until July, when Greylock holds its LP meeting. But apparently rumors were circulating around the grapevine that Greylock was closing its Waltham office and laying everyone off, so Helman needed to set the record straight. (The new space in Menlo Park will be big enough to add a few more partners -- and Greylock is unusual right now in that very few VC firms are growing.)

He said that Greylock raised its most recent fund in 2005 ($500 million), but hasn't been out trying to raise a new one -- though they're talking about when might be the right time.

Helman portrayed this geographical shift as something that has been taking place over the last eight or ten years for the firm, as the Greylock partnership and portfolio has expanded in the Bay Area. "Fifteen years ago, we were 75 percent Boston and 25 percent Silicon Valley," he said, "but more recently we've become much more focused on Silicon Valley." Portfolio companies out there include Facebook, LinkedIn, Cuil, and Revision3.

"Everybody has been asking me, do you think Boston is terrible and there's no opportunity here," Helman said. "That's not what we think. The issue is one of relativity. We get paid to deliver relative value add. For us, this is about the relative best geography."

My take: this is not such a big change for Greylock, where they've been focused predominantly on West Coast opportunities for a while... but the fact that the firm will be adding partners in the Valley and not in Massachusetts is a net negative for the entrepreneurial scene here.

Your thoughts?

(Update: Here's the official Greylock release on the move... and some data and reaction from Bijan Sabet at Spark Capital.)

Labels: , , , , , , , ,

Friday, September 14, 2007

Third Rock Caps First Fund at $378 Million

Third Rock Ventures, the newest life sciences venture firm in town, has finally put out the press release announcing its new fund: $378 million.

The IN VIVO blog talks to partner Kevin Starr about the firm's focus. From that post:

    The six general partners—including former Millennium CEO Mark Levin—expect to hold key management positions at these start-ups during the first year or so. They’ll negotiate the deals, set up the shop, do the hiring, etc., etc. to assure these companies get off to the right start. “We’ll be the start-up team,” says Kevin Starr, the former chief operating officer and chief financial officer at Millennium. The partners will serve CEOs, heads of science, whatever is necessary “to make sure these companies are built the right way, have the right cultures, hire the right people, and do the right partnerships. We are going to get involved in a hands-on way.”


And Forbes also has a piece, which is pretty critical of Millennium as an investment and as a company. Matthew Herper also talks about Third Rock's strategy:

    Part of the new venture fund's approach will be to closely manage start-ups. Other VCs are backing dozens of companies a year, but Third Rock will only look at a few biotechs, each getting a few tens of millions of dollars. At that rate, it will take the fund several years to invest all the money that it has.

    Another strategy: Third Rock won't raise $50 million or $100 million worth of venture capital for a single biotech before bringing the company to the public markets, private equity or selling out to a larger drug maker. These deals are just too dilutive. Better to follow the Millennium example and start generating revenue through partnerships early.


Last month, I noted in the Globe:

    Greylock Partners of Waltham offered an assist in getting Third Rock into orbit, investing some of its own money and introducing Levin to several investors; Greylock's Bill Helman was one of the original investors in Millennium. Levin himself was a VC with Mayfield Fund in California before starting Millennium.

    "Life sciences is an area of pretty mediocre returns for venture capital," says Helman. "They have a strategy for breaking out of that." Levin didn't respond to calls seeking comment.

Labels: , , , , , , ,