LinkedIn co-founder Reid Hoffman is undoubtedly one of the Valley’s most prolific angel investors. Hoffman has made angel investments in Digg, One King’s Lane, Facebook, Flickr, Last.fm, Ning, Six Apart and Zynga. Last November, Hoffman joined VC firm Greylock as a partner, making all his future angel and seed investments through the VC fund. Today at TechCrunch Disrupt, Greylock Partners and Hoffman have announced a $20 million fund solely for seed and angel investments.
Hoffman will be managing partner of the fund, which is called the Greylock Discovery Fund and is part of the VC firm’s 13th fund raised last fall, totaling $575 million. Hoffman and his team will make investments anywhere from $25,000 to $500,000 in startups in the technology space. We are told the funding will be mainly put towards investments that don’t result in a board seat at the company. Hoffman has a great track record of angel investing, making big bets on Zynga, Facebook and more, and Greylock is essentially giving him the opportunity to do what he does best (besides, of course, founding companies like LinkedIn and PayPal).
As super angels (like Hoffman) are now challenging venture capital firms like Greylock, as startups take angel funding, launch without much investment, and don’t reach out to VCs until late in the game when startup valuations are higher and returns are lower.
Because of this pressure, VC firms are starting to respond with their own early stage funds, which is what Greylock is doing with Hoffman. Some venture firms like Andreessen Horowitz make both seed investments as well as larger infusions in startups.