LinkedIn co-founder gets $20 million in seed cash to play with

Greylock Partners puts Reid Hoffman in charge of early-stage angel investment fund

If you've been over at TechCrunch during the past couple of weeks, it probably hasn't escaped your attention that the online tech pub this week is hosting its TechCrunch Disrupt conference in San Francisco, where a bunch of start-ups officially launch and TechCrunch founder Michael Arrington plants himself permanently on stage in an effort to goad CEOs into launching F-bombs. It's good work if you can get it.

Among the steady stream of news items coming from the show is the announcement that venture capital firm Greylock Partners has formed the $20 million Greylock Discovery Fund to be used exclusively for seed and angel investments.

The fund will be managed by LinkedIn co-founder Reid Hoffman, who joined Greylock as a partner last November and has a long history of providing seed funding to start-ups. Among the companies Hoffman has showered with early-stage cash are social bookmarking (and recently embattled) site Digg, social networking platform vendor Six Apart and Facebook (not sure what it does; I think it was mentioned in a new movie, though).

According to TechCrunch's Leena Rao, investments from the fund will be in the $25,000 to $500,000 range. (Honestly, I'm not sure what $25,000 will do for a start-up, other than to allow the founder to write a business plan. But those are helpful to have, I hear.)

For start-ups, the attraction of angel investing is that there are fewer strings attached than with funding that comes from venture capitalists. It's less likely that angels will control the board of directors or demand rights to first-born children. In addition to the critical financing, angels offer valuable connections and expertise, just like VCs, but with a lighter hand. And that's why they're called angels.

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