Last week, eight current InSITE Fellows joined Ian Sigalow for breakfast at the freshly finished, industrial-chic offices of Greycroft Partners in Midtown Manhattan. Office-wise, it’s been a long journey for Ian since he co-founded Greycoft with Alan Patricof in 2006 and often found himself shuttled from desk to desk within the Apax Partners office. Needless to say, his current digs are a big upgrade, and the Fellows enjoyed their glass and steel surroundings while learning a great deal from Ian on how Greycoft approaches its business.
By nearly any measure, Greycroft is a remarkable firm. As the only VC firm with offices in New York and LA, it focuses on early stage technology companies serving the industries endemic to those cities. Today, over 90% of its portfolio is based outside of the San Francisco Bay area. In fact, if you look at Greycroft’s most recent Q4 investments, you’ll see companies headquartered in Cincinnati, LA, and Indianapolis. Outside these somewhat non-traditional domestic technology markets, Greycroft has also uncovered investment opportunities in Europe and, more recently, China. An interesting partnership gives the firm entre to interesting entrepreneurs both on the Mainland and in Hong Kong, leading to investments in companies such as 9GAG and App Annie.
The firm has also very intentionally kept its fund sizes relatively small, making around 30 Seed and Series A investments per year, and reserving a high proportion of its capital for follow-on financings. This strategy carries a number of correlated tactics that differ from a traditional VC model, including unique approaches to syndication, board seats, and minimum ownership levels. Moreover, although Greycroft recently launched a growth fund, the team and structure for this vehicle exist completely separate to their venture counterparts. More detail on their investment approach, as well as advice for your pitch, can be found here.
Other topics we discussed at breakfast were nearly endless, as the Fellows made every effort take advantage of their available time with Ian. One interesting thread covered how Greycroft handles the vast amount of data needed to assess early stage businesses. The firm sees nearly 200 new companies each week and, as such, has developed a number of tools and processes to assist their evaluations. They subscribe to a number of proprietary databases, have built internal software tools, manage an offshore team for data collection, and often leverage the products of portfolio companies like WorkFusion. Overall, a massive and impressive undertaking, and it shows that innovative VCs like Greycroft truly practice what they preach when it comes to managing their own businesses and workflows.
All in all, the morning was incredibly fun and thought provoking. We even agreed on some cutting edge research for one of our PhD candidate Fellows to tackle with the Greycroft team. But that’s probably a topic for its own future post…