Goldman Sachs has agreed to buy San Francisco-based Industry Ventures, a 25-year-old investment firm with $7 billion in assets, CNBC first reported on Monday. The agreement highlights the growing importance of secondary markets and buyouts as traditional venture exits remain sluggish.
The investment bank will pay $665 million in cash and stock, with up to an additional $300 million tied to the company’s performance through 2030, according to a Goldman release. The deal is expected to close in the first quarter of next year, and all 45 Industry Ventures employees will join Goldman.
We have reached out to Swildens for more information.
The acquisition comes as venture funds increasingly turn to non-traditional exits as the IPO drought drags on. Speaking on TechCrunch’s StrictlyVC Download podcast earlier this year, Hans Swildens, founder and CEO of Industry Ventures, said that technology buyout funds currently account for 25% of all liquidity across the venture ecosystem and are “a huge piece of liquidity.”
Swildens explained that venture managers are being forced to adapt their approach. “Just going out and looking at companies and putting them in a fund and then waiting for an exit through an IPO or strategic M&A is probably not going to work anymore,” he said in a podcast interview. “[VCs] We need to start working on alternative liquidity solutions. ”
He noted that at the time (April), at least five major venture funds employed full-time staff dedicated to producing nontraditional exits such as secondary transactions, continuation funds, and buyouts. “All the branded funds are fully staffed and looking at their liquidity structure,” Swildens said.
Goldman is making acquisitions to strengthen its $540 billion alternative investment platform, which the bank has positioned as a key growth engine.
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“Industry Ventures’ trusted relationships and venture capital expertise complement our existing investment franchise and expand our clients’ access to 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 and 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 says it has made more than 1,000 investments to date, backed more than 700 venture companies, and boasts an 18% internal rate of return.
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