Goldman Sachs acquires Industry Ventures for up to $965 million as alternative VCs surge

Goldman Sachs has agreed to acquire Industry Ventures, a 25-year-old San Francisco-based investment firm with $7 billion in assets under management, CNBC shall be the first to report on Monday. The deal highlights the growing importance of secondary markets and buyouts as traditional ventures slowly exit.

According to Goldman’s announcement, the investment bank can pay USD 665 million in money and equity, and as much as USD 300 million more shall be linked to the company’s performance by 2030. The deal is expected to close in the first quarter of next yr, with all 45 Industry Ventures employees joining Goldman.

We contacted Swildens for more information.

The acquisition comes amid a prolonged drought on the IPO market, as a results of which enterprise capital funds are increasingly selecting non-traditional exits. On TechCrunch’s StrictlyVC Download podcast earlier this yr, Industry Ventures founder and CEO Hans Swildens said technology buyout funding now accounts for 25% of all liquidity across the enterprise ecosystem – “a huge chunk of liquidity,” he said.

Swildens explained that enterprise managers are being forced to adapt their approach. “Just going out and looking at companies, putting them in your fund and then waiting for an IPO or a strategic M&A exit is probably not going to work anymore,” he said in a podcast interview. “[VCs] we want to start working on alternative liquidity solutions.”

At that point – in April – he noted that at least five large enterprise capital funds had full-time staff dedicated to nontraditional exits, including secondary deals, follow-on funds and buyouts. “All branded funds have employees and are thinking about liquidity structures,” Swildens said.

Goldman is making the acquisition to strengthen its $540 billion alternatives investing platform, which the bank has identified as a key growth engine.

“Industry Ventures’ trusted relationships and venture capital expertise complement our existing investment franchises and expand clients’ opportunities to access the world’s fastest-growing companies and sectors,” Goldman CEO David Solomon said in a prepared statement. “By combining the global resources of Goldman Sachs with the venture capital expertise of Industry Ventures, we are uniquely positioned to serve the increasingly complex needs of entrepreneurs, private technology companies, limited partners and venture fund managers,” the statement continued.

Industry Ventures claims to have revamped 1,000 investments, has stakes in over 700 enterprise firms and boasts an internal rate of return of 18%.