Greylock collects $575m for Fund XIII

The VC firm has also hired LinkedIn co-founder Reid Hoffman as a partner.

Venture firm Greylock Partners, which has been making investments since 1965, has closed its 13th fund after collecting $575 million.

The fund will focus investments on consumer technology, services and tech infrastructure. Greylock’s 12th fund closed in 2005 after collecting $500 million.

Along with the fund close, Reid Hoffman, a co-founder and executive chairman of business social networking web site LinkedIn, has joined the firm as a partner, Greylock said in a press release.

Hoffman will retain his day-to-day duties with LinkedIn as chairman, and will make investments in early stage consumer internet and software companies and help advise executives of Greylock portfolio companies.

Greylock has invested in some of the biggest names in social networking technology, including social networking site Facebook and LinkedIn. The firm also has made investments in internet music site Pandora and car rental service ZipCar.

The firm operates in California’s Silicon Valley, Boston, India and Israel. Greylock was founded in 1965 by Bill Elfers, who had worked at one of the pioneering venture firms in the US, American Research & Development. Elfers passed away in 2005.

Greylock is confronted with a venture market that has produced lacklustre returns over the past decade. According to research from placement agency Probitas Partners, the median internal rates of return for venture capital vintage years 1999 through 2008 have remained at or below zero. Probitas also found that LP commitments to venture capital funds have dropped from $33.1 billion in 2007 to $5.1 billion in the first half of 2009.

“In this difficult environment, all investors need to be particularly selective about the funds in which they invest,” Andrew Golden, president of Princeton University Investment Company, said in a statement. “Our investment in Greylock XIII represents the lion’s share of the commitments we plan to make to venture capital funds this year.”

Other Greylock LPs include the Harvard, Duke and Stanford endowments.

Khosla Ventures recently raised $1 billion for two venture funds to focus on early stage and mid-stage venture investments. The funds are targeting investments in information technology, clean energy, sustainable materials and other new technologies for US infrastructure.