The Series B stage for a startup is a tricky one. The company has spent a few years surviving: building a team, raising seed funding, and launching a product. But achieving the next leap—finding market fit and scaling growth—is arguably the hardest yet, where ideas meet reality. Shay Grinfeld, the cofounder and managing partner of Greenfield Partners, describes this phase as an “environment of controlled chaos.”
Grinfeld says that his venture firm has found the winning formula for helping startups navigate the early growth step of their journey, and Greenfield has the track record to prove it, including two deployed funds and $1 billion of assets under management. Greenfield has just closed its third, Fortune can exclusively report: a $400 million fund backed by an array of limited partners including pension funds and institutional investors mostly spread across the U.S. and Israel.
At a time when many venture funds are struggling to raise and investments are concentrated in very early or later stages, Greenfield is bucking the trend by backing mostly Series B and Series C startups—a strategy the firm started as part of the investment giant TPG Growth, before spinning off in 2020.
“We are here to win,” Grinfeld told me from the firm’s offices overlooking New York City’s Union Square. “And to become one of the best brands that every [Series] A investor, every A round founder, and every seed founder that is aiming to build a company that will change the world will want Greenfield Partners to be their B round investor."
Part of Greenfield’s value proposition is its close ties to the Israeli tech ecosystem. Grinfeld was an F-16 pilot in the Israeli Air Force—a philosophy he says he has instilled in his team. “We will literally roll our sleeves and fight like hell,” he tells me.
Grinfeld and his founding partner, Yuda Doron, were investors at TPG Growth when their employer asked them in 2016 to open an Israeli office in Tel Aviv to make early growth-stage investments.
In 2020, Grinfeld and Doron raised $150 million to spin out their investments from TPG Growth and establish their own fund. That same year, they began to raise their second fund, which reached $300 million. Though TPG Growth provided them the opportunity to create Greenfield, TPG did not continue as an investor in the new firm.
Greenfield invests in around 12 to 15 deals per fund and has had three exits so far. The first, a data security company called Guardicore, was acquired by Akamai for around $600 million in 2021. Another, the email security company Avanan, was acquired by Check Point in 2021 for around $300 million.
According to Grinfeld, their first fund has close to a 2x DPI, or distributions to paid-in capital. The second fund is fully deployed and was mostly invested in 2021. The most recent fund, which Greenfield just finished closing a few months ago, is about 25% deployed.
Grinfeld says that the principle problem that Greenfield helps its portfolio companies solve is not just how to scale, but how to scale efficiently—to make sure that if they put $1 in sales and marketing, they get back $2, and not vice versa. “In [VC] history, there were some that were pushing growth at all cost, which doesn’t make sense,” Grinfeld says. “You want to make sure that the cost of growth is cheaper than the cost of capital.” The other main challenge is creating a substantial technology moat. Or, as Grinfeld puts it, “Can they actually protect their turf?”
Greenfield’s team of 22 works with its companies to do quarterly health checks across seven key pillars—which include hiring, sales, and customer success—and then plug into the startups to help with each area. Grinfeld says a number of its portfolio companies could target IPOs soon, including the infrastructure firm Vast Data, which was last valued at $9.1 billion.
Greenfield is still split between New York and Tel Aviv, and Grinfeld says the majority of its investments still have a connection to Israel, whose tech ecosystem tends to focus on cybersecurity and enterprise software. Despite the ongoing war, Grinfeld says his firm’s internal data shows that VC investments into Israeli startups, as well as exits, remained stable. “People have an extreme desire to overachieve, given the circumstances,” he says.
Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com
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