Life & Culture

The Facebook backer's $350m start-up fund


It is every venture capitalist's dream: invest in a young company and watch it grow on an unprecedented scale in a short space of time. And that is exactly what leading VC firm Greylock has managed to do - again and again.

It counts US-based Facebook, LinkedIn and Groupon among its successful investments. But it is not all about those coming out of America - certainly not as far as Greylock partner Moshe Mor is concerned.

The 50 year-old Israeli joined Greylock, headquartered in Silicon Valley, in 2000. Today he heads Greylock Israel - a fund focusing on local investment opportunities plus those in Europe, particularly the UK.

Since its launch in 2006 the Greylock Israel fund has raised more than $350 million for investment in start-ups - up to 30 per cent are expected to be UK-based.

What does he look for? "It's interesting. For us, when it comes to technology-heavy start ups, Israel is the place for opportunities. The technology-oriented companies here are some of the best in the world. On the other hand, in the UK there are some very interesting consumer-oriented start-ups, which isn't surprising given the size of the UK market. It is large enough to support companies in their early days before going global and there are some opportunities there that you don't find in Israel."

That said, he acknowledges that there are technology companies in Britain worth investing in.

Greylock's UK investments include internet money lender Wonga, online marketplace and Just Eat, the market leader in online ordering of takeaway food.

At the time of writing the fund has supported six UK companies and 20 in Israel but "it is not like comparing apples to apples" says Mr Mor. "In Israel we usually invest very early. It could be a check for $100,000 or $1 million - not necessarily large amounts. Whereas in the UK we usually invest in more advanced companies where the size of the cheques are much larger."

Perhaps though not as large as the one written in 2006 for a stake in Mark Zuckerberg's Facebook. Mr Mor was very much involved in the decision process to back the social networking sensation. He recalls: "When we invested Facebook was valued at $500 million. It was a very tough decision - a high valuation for a young company which didn't have revenues yet." Meritech Capital Partners also participated in the financing round along with existing investors Peter Thiel and Accel Partners.

Mr Mor admits he didn't think it would become as big a phenomenon as it has. "I wish I could say I did but I didn't. No one could imagine it would become that big and that valuable.

"We were lucky." Quite. Today Facebook is valued at around $50 billion.

Prior to Greylock Mr Mor, who holds an economics degree from Tel Aviv University and an MBA from Harvard Business School where he was a Baker Scholar, spent eight years at software provider SPL WorldGroup. He had previously held management positions at software companies in diverse stages. He also served six years in the Israeli Army as a captain in the military intelligence branch.

Greylock receives approaches from up to 100 companies a month. Only about one fifth are taken further.

"We definitely say 'no' more than 'yes'. You have to. It doesn't mean you always get it right. It is not about what you don't invest in but what you do. We invest in six or seven in a year." Greylock does not invest in life sciences.

What does he consider the hot areas at the moment? "The mobile phone area is mushrooming. It's a big growth driver in the market and a very exciting area."

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