Goldman Sachs has agreed to acquire San Francisco-based investment firm Industry Ventures for $965 million. The investment bank is paying $665 million in cash and equity, with up to $300 million more tied to the firm’s performance through 2030, according to a release from Goldman. The deal is expected to close in the first quarter of next year, and all 45 Industry Ventures employees are expected to join the investment bank.
Industry Ventures has one of the largest portfolios of venture capital partnerships from the seed stage to late-stage growth stage in the United States.
“Industry Ventures pioneered venture secondary investing and early-stage hybrid funds, areas that are rapidly expanding as companies stay private longer and investors seek new forms of liquidity,” said Goldman’s CEO David Solomon in a statement. Industry Ventures’ founder and CEO Hans Swildens, along with senior managing directors Justin Burden and Roland Reynolds, will become partners within Goldman Sachs Asset Management.
READ: Goldman Sachs trials AI-powered coder, sparking debate over developer jobs (
The San Francisco-based investment firm, founded in 2000, has $7 billion of assets under supervision, largely through secondary, co-investment and seed money it provides to external venture capital funds. Goldman has been among its investors for about two decades.
According to TechCrunch, this comes at a time when venture funds increasingly turn to non-traditional exits amid a prolonged IPO drought that only now looks to be breaking. Swildens said that tech buyout funds now account for 25% of all liquidity in the entire venture ecosystem — “a huge chunk of liquidity,” he said.
Swildens explained that venture managers are being forced to adapt their approach. “Just going out and seeing companies, putting them in your fund and then waiting for an IPO or strategic M&A exit probably won’t work anymore,” he said in the podcast interview. “[VCs] need to start working on alternative liquidity solutions.”
READ: Goldman Sachs raises US recession risk to 45% (
Swildens had also noted that at least five major venture funds had hired full-time staff dedicated to manufacturing non-traditional exits, including secondary transactions, continuation funds, and buyouts. “All the brand name funds are all staffing and thinking through liquidity structures,” Swildens said.
Swildens also told Bloomberg that 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 U.S. venture capital space. His firm has delivered a return on capital to investors of 2.2 times since its inception.
Industry Ventures says it has made more than 1,000 investments, has stakes in more than 700 venture firms, and that it boasts an internal rate of return of 18%.