Goldman Sachs to Buy Industry Ventures in $965M Deal as VC Exits Soar
▼ Summary
– Goldman Sachs is acquiring Industry Ventures, a 25-year-old San Francisco investment firm with $7 billion in assets under management.
– The deal is valued at $665 million in cash and equity, with up to $300 million more tied to performance through 2030, and is expected to close in Q1 next year.
– This acquisition highlights the growing importance of secondary markets and buyouts as traditional venture capital exits like IPOs remain sluggish.
– Industry Ventures founder Hans Swildens noted that tech buyout funds now account for 25% of all liquidity in the venture ecosystem, forcing VCs to pursue alternative exit strategies.
– Goldman Sachs aims to strengthen its $540 billion alternatives investment platform and expand client access to venture capital opportunities through this acquisition.
In a major strategic move, Goldman Sachs has agreed to acquire Industry Ventures, a San Francisco-based investment firm with twenty-five years of experience and $7 billion in assets under management. This transaction, valued at up to $965 million, signals a significant shift in how venture capital firms are navigating today’s challenging exit environment. The deal underscores the growing reliance on secondary markets and buyouts as traditional paths like initial public offerings remain difficult to access.
The investment bank will pay $665 million in a combination of cash and equity, with the potential for an additional $300 million tied to the firm’s performance through 2030. The acquisition is anticipated to be finalized during the first quarter of the coming year. All 45 employees of Industry Ventures are expected to join Goldman Sachs as part of the agreement.
This acquisition arrives at a time when venture funds are actively pursuing non-traditional liquidity solutions. Hans Swildens, the founder and CEO of Industry Ventures, highlighted this trend earlier in the year, noting that tech buyout funds now represent 25% of all liquidity within the venture ecosystem. He described this as a substantial portion of the market’s overall liquidity.
Swildens emphasized that venture managers can no longer rely solely on conventional strategies. The old model of investing in companies and simply waiting for an IPO or a strategic merger and acquisition exit is increasingly ineffective. Instead, he argued, venture capitalists must proactively develop and implement alternative liquidity solutions to succeed.
Back in April, Swildens observed that at least five prominent venture funds had already hired dedicated, full-time staff to engineer these non-traditional exits. Their focus includes secondary transactions, continuation funds, and buyouts. He confirmed that all the major, well-known funds are actively staffing up and carefully planning their approaches to liquidity structures.
For Goldman Sachs, this purchase strengthens its substantial $540 billion alternatives investment platform, which the bank has pinpointed as a crucial driver for future growth.
In an official statement, Goldman CEO David Solomon said that the trusted relationships and deep venture capital expertise of Industry Ventures complement the bank’s existing investment operations. This combination, he explained, will create expanded opportunities for clients seeking access to the world’s most rapidly growing companies and sectors. By uniting the global resources of Goldman Sachs with the specialized knowledge of Industry Ventures, the firm believes it is uniquely equipped to serve the increasingly complex demands of entrepreneurs, private technology companies, limited partners, and venture fund managers.
Industry Ventures reports an impressive track record, having made more than 1,000 individual investments and holding stakes in over 700 different venture firms. The firm also boasts an internal rate of return of 18%.
(Source: TechCrunch)
