Greycroft raises $175 million for third fund

The VC firm's previous two funds have invested in over 60 companies altogether

Looks like Greycroft Partners has a few extra bucks to spend this Cyber Monday.  The VC firm behind companies like Klout, The Huffington Post, Buddy Media, Trunk Club, Vizu, and others, announced Monday that it has closed its third fund to the tune of $175 million.

Nearly all of its previous investors participated in the oversubscribed round, including JP Morgan, BlackRock Private Equity Partners, Fairview Capital, and Invesco Private Capital, as well as new investors Hall Capital, Hamilton Lane, Greenspring Associates, and Cambridge Associates on behalf of their clients.

The firm says that Greycroft III will follow the same strategy as previous funds with a focus on B2B and B2C Internet and mobile companies.  The firm will also focus on smaller Series A rounds, which allows Greycroft to generate venture-type returns regardless of the IPO market.

Greycroft has already seen some big returns from its last two funds.  It closed its first fund in 2006 for a total of $75 million, which it invested in 34 companies.  To date, 11 companies from Greycroft I have been sold at a profit and the fund has generated a 130% return for its investors.

Greycroft II, a $131 million fund, was closed in April 2010 and has invested in 32 companies, including Klout, Pulse, Tagman, and Maker Studios, among others.  Four of the companies in Fund II have raised follow-up financing in excess of $100 million.

With Fund II, Greycroft also branched out from Series A rounds to seed rounds--with the caveat that it focuses on repeat entrepreneurs.  

Greycroft has unique origins based on the idea that 1) startups today are able to scale much more easily with less direct investment, and 2) large venture firms have a habit of over-capitalizing early stage companies, which can have the unintended consequence of blocking many exit opportunities.  Greycroft launched in 2006 with the aim of spreading out its investments in $500K to $5 million increments (at inception).

“Many believed that venture capitalists should take board seats in every deal and invest as much as possible in a concentrated set of companies,” said Ian Sigalow, in a statement.  “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 was not immediately available to comment, but the firm has participated in a number of rounds this year, including Scopely, NiftyThrifty, AwesomenessTV, 33Across, and Koding Logs, among others. 

Some of Greycroft’s portfolio companies that have existed in the last two years include The Huffington Post, which was sold to AOL, Babble, which was acquired by Disney, Buddy Media, which was acquired by Salesforce, Vizu, which was acquired by Nielsen Holdings, and more. 

Image source: jhu.edu