Alan Patricof’s Greycroft Partners has closed its third fund with $175 million in commitments. The firm, which focuses on early stage Internet and media companies, saw return investors including JP Morgan, BlackRock Private Equity Partners, Fairview Capital, and Invesco Private Capital. New LPs include Hall Capital, Hamilton Lane, Greenspring Associates, and Cambridge Associates. Greycroft Partners was formed in 2006.
Greycroft Partners, a venture capital firm that specializes in early stage Internet and media companies, announced today the closing of the fundraising for its latest Fund, Greycroft III. Greycroft III was substantially oversubscribed, but held to the original capped amount of $175 million.
Virtually all of Greycroft’s previous investors committed to the new fund, including JP Morgan, BlackRock Private Equity Partners, Fairview Capital, and Invesco Private Capital. The firm also added a number of new foundations and educational institutions, as well as preeminent managers such as Hall Capital, Hamilton Lane, Greenspring Associates, and Cambridge Associates on behalf of their clients.
“We have invested in Greycroft Partners since 2009. Their team has demonstrated that small funds can represent attractive investment opportunities,” said Russ Steenberg, Global Head of BlackRock Private Equity Partners. “Greycroft’s portfolio companies benefit from hands-on assistance and access to an extensive network of media and technology experts that can help them grow into successful and long-lasting businesses.”
Greycroft’s first fund, which was raised in 2006, was $75 million and invested in 34 companies. Fund I has already sold 11 companies at a profit, a subset of which are listed below, and has a number of high profile unrealized investments including Collective, Extreme Reach, uSamp, and WideOrbit. Greycroft I returned more than 130% of committed capital to the Limited Partners to date. It is among the top performing venture funds of its vintage year as measured by the Cambridge Associates Index.
“Our strategy was unconventional when we launched Greycroft in 2006,” says Ian Sigalow, General Partner at Greycroft. “Many believed that venture capitalists should take board seats in every deal and invest as much as possible in a concentrated set of companies. Instead we focused on building investor syndicates, even if it meant less equity for Greycroft, and finding capital efficient businesses. This approach has resonated with entrepreneurs as well as co-investors and our limited partners.”
Greycroft II, which closed in April 2010, was capped at $131 million and funded 32 companies. The Fund has performed as well as Greycroft I, although realizations have yet to be made due to its early life. The fund currently has a number of companies with substantial revenue traction and four companies have raised follow-on financings at valuations in excess of $100MM. High profile investments in Greycroft II include Klout, Tagman, Pulse, and Maker Studios, among others.
“We have a strong existing relationship with Greycroft Partners and are pleased to continue our support in Fund III,” says Larry Unrein, Global Head of the Private Equity and Hedge Fund Groups at JPMorgan Asset Management. “We are committed to the small fund strategy which promotes investment in unique and innovative leading technology companies.”
Greycroft III will follow the same strategy as the previous two funds, focusing on B2B and B2C Internet and mobile companies with an emphasis on smaller Series A rounds in capital efficient businesses. This investment strategy allows Greycroft to differentiate itself and produce venture-type returns independent of the IPO market. Greycroft initially participated only in companies with some commercial traction, but with the introduction of Fund II initiated a small seed program that is dedicated to repeat entrepreneurs in its ecosystem. This program has already produced several successful investments and Greycroft will continue to fund that program going forward.
The same General Partners will be leading, Alan Patricof, Dana Settle and Ian Sigalow, joined by Venture Partners Bo Peabody, Alan Gould, and Paul Bricault. The firm has deep relationships in New York and Los Angeles where its offices are located, and portfolio companies benefit from access to clients and talent in these markets. In addition, Greycroft will continue to fund companies globally as it pursues the best investments in its respective sectors.
“We are very proud of what we’ve built in a short period of time,” said Dana Settle, General Partner at Greycroft. “We are grateful to our existing investors and new investors who have made the fundraising part of our jobs extremely efficient so that we can stay focused on what we do best, investing in best of breed companies in our markets and growing the firm.”
The following companies are among Greycroft’s realized exits over the last two years:
— M5 Networks, acquired by Shoretel
— Adenyo, acquired by Motricity
— Sometrics, acquired by American Express
— Vizu, acquired by Nielsen Holdings
— Huffington Post, acquired by AOL
— Babble, acquired by The Walt Disney Company
— Buddy Media, acquired by Salesforce.com
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