Greylock Gets $575M and Some Social Media Star Power

[qi:115] Greylock Partners, a Silicon Valley venture capital firm, today said it has closed its 13th fund at $575 million, and brought on LinkedIn co-founder and Executive Chairman Reid Hoffman as a new partner. Greylock XIII was supposed to be a $500 million fund, according to David Sze, a Greylock partner, but demand from partners pushed up the amount.

The issue of too much capital in the venture industry may have helped the firm’s fundraising efforts, as limited partners tried to get into an established fund, Sze said. With this fund Greylock will continue its focus on seed and early stage investing, although the firm can also take stakes in later-stage deals, Sze added.

Even with trends such as open-source software and cloud computing lowering the cost of creating a company, Sze doesn’t quite buy into the idea that today’s startups need less capital overall. He points to investments such as Digg, LinkedIn and Facebook that have all taken in a lot of dollars, primarily to help them build out huge server infrastructures to support their users. Sze doesn’t see that changing, because he thinks at a certain point startups will want to own their infrastructure, and even if they don’t it will still cost a lot to host a large-scale consumer web startup in the cloud.

“The most successful companies and biggest companies will be owning their own infrastructure primarily for a while,” Sze said. “To the extent that cloud computing helps companies scale in more a cost-efficient way, that allows us to see which ones play out, but we don’t foresee a time that a company that scales using cloud services will need less capital.”

With Hoffman onboard, Greylock will continue its investments in consumer startups, SaaS, and storage software for the enterprise, and plans to focus on mobile investments.

The 44-year-old firm has made investments in a variety of big companies including Digg, Facebook, Farecast (which was purchased by Microsoft), LinkedIn, Cloudera, Workday, Data Domain (which was bought by EMC), Pandora, and ZipCar.