Industry Ventures founder Hans Swildens and two senior colleagues will become partners at Goldman. — Reuters
NEW YORK: Goldman Sachs Group Inc has agreed to buy venture capital investor Industry Ventures in a deal that expands the Wall Street bank’s reach into the world of American entrepreneurs.
Goldman will pay as much as US$965mil – starting with US$665mil in cash and equity when the transaction is completed, plus up to US$300mil, also in cash and equity, based on Industry Ventures’ performance through 2030, according to a statement Monday.
The San Francisco-based investment firm, founded in 2000, has US$7bil of assets under supervision, largely through secondary, co-investment and seed money it provides to external venture capital funds.
It has counted Goldman – which has about US$3.3 trillion of assets under supervision – as an investor for about two decades.
Industry Ventures founder Hans Swildens and two senior colleagues will become partners at Goldman.
Swildens will report to Michael Brandmeyer, a top manager in the bank’s external investing group and a longtime friend he met at Columbia Business School.
Through roughly 10,000 underlying holdings and the more than 325 firms it has partnered with, Industry Ventures has exposure to about a fifth of the US venture capital space, Swildens said in an interview.
His firm has delivered a return on capital to investors of 2.2 times since its inception.
That “consistency of his returns” was key to Goldman’s interest, said Marc Nachmann, the bank’s head of asset and wealth management. “It’s not easy to do over a 20-year period.”
“The companies started discussing a deal several months ago, and their agreement will help Goldman get closer to potential clients for its banking and wealth-management arms,” Nachmann said.
Shares of the lender are up 37% this year. It’s set to report third-quarter results later yesterday.
While the additional assets are relatively small for Goldman’s size, venture capital investing is a key growth area within the US economy as companies increasingly remain private, with many fuelled by booms in artificial intelligence and infrastructure.
The deal is expected to close in the first quarter. — Bloomberg
