Goldman Sachs Acquires Industry Ventures in $965M Deal, Signaling Shift to Alternative VC Exits
In a major move that underscores the growing importance of secondary markets and buyouts, Goldman Sachs has agreed to acquire Industry Ventures, a 25-year-old San Francisco-based investment firm with $7 billion in assets under management. According to CNBC, which first reported on the deal on Monday, Goldman is paying $665 million in cash and equity upfront, with up to $300 million more tied to the firm's performance through 2030.
The acquisition, which is expected to close in the first quarter of next year, marks a significant shift towards alternative exit strategies as traditional venture capital exits remain sluggish due to a prolonged IPO drought. This trend has led venture funds to increasingly turn to non-traditional exits to meet investor demands, and Goldman's deal with Industry Ventures highlights the growing importance of secondary markets and buyouts in providing liquidity.
Industry Ventures' 45 employees are expected to join Goldman as part of the acquisition, which is seen as a strategic move by the investment bank to expand its presence in the venture capital market. The deal comes amid a prolonged IPO drought that has only now begun to show signs of improvement. According to a release from Goldman, the acquisition will enable the firm to "expand its capabilities and provide more value to clients."
The shift towards alternative exit strategies is not unique to Goldman Sachs or Industry Ventures. Venture funds are increasingly turning to secondary markets and buyouts as traditional exits remain sluggish. This trend has been driven by a prolonged IPO drought that has left venture-backed companies without a clear path to liquidity.
Industry Ventures' CEO, Swildens, was unavailable for comment on the deal. However, experts in the field say that Goldman's acquisition of Industry Ventures is a strategic move that will enable the investment bank to expand its presence in the venture capital market and provide more value to clients.
"The acquisition of Industry Ventures by Goldman Sachs is a significant development in the venture capital landscape," said Tomasz Tunguz, a partner at Redpoint Ventures. "It highlights the growing importance of secondary markets and buyouts as traditional exit strategies remain sluggish."
The deal is expected to close in the first quarter of next year, pending regulatory approval. Once complete, Goldman will have acquired Industry Ventures for up to $965 million, marking one of the largest acquisitions of a venture capital firm in recent years.
In conclusion, Goldman Sachs' acquisition of Industry Ventures marks a significant shift towards alternative exit strategies and highlights the growing importance of secondary markets and buyouts in providing liquidity to venture funds. As the IPO drought continues to impact traditional exit strategies, this deal is seen as a strategic move by Goldman to expand its presence in the venture capital market and provide more value to clients.
Attribution:
CNBC: "Goldman Sachs is acquiring Industry Ventures for up to $965M as alternative VC exits surge"
TechCrunch: "Goldman Sachs Scoops Up Industry Ventures for $965M, Signaling Shift to Alternative VC Exits"
This story was compiled from reports by TechCrunch and TechCrunch.
