Ian Sigalow, general partner at Greycroft

Greycroft Partners’ third fund closes at USD175m

Greycroft Partners, a venture capital firm that specialises in early stage internet and media companies, has held the closing of the fundraising for its latest fund, Greycroft III.

The fund was substantially oversubscribed, but held to the original capped amount of USD175m.

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 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,” says 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 USD75m and invested in 34 companies. Fund I has already sold 11 companies at a profit and has a number of high profile unrealised investments including Collective, Extreme Reach, uSamp, and WideOrbit. Greycroft I returned more than 130 per cent of committed capital to the limited partners to date.

“Our strategy was unconventional when we launched Greycroft in 2006,” says Ian Sigalow (pictured), 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 USD131m and funded 32 companies. The fund has performed as well as Greycroft I, although realisations 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 USD100m. High profile investments in Greycroft II include Klout, Tagman, Pulse, and Maker Studios, among others.

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.

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