Goldman Sachs Acquires Industry Ventures for Up to $965M

Goldman Sachs to Acquire Industry Ventures

Goldman Sachs has reached an agreement to acquire Industry Ventures, a San Francisco-based investment firm established 25 years ago. The firm currently manages $7 billion in assets, as first reported by CNBC on Monday.

This acquisition highlights the increasing significance of secondary markets and buyout strategies, particularly as traditional venture capital exit routes have been experiencing slowdowns.

Deal Details and Expected Closure

The total consideration for the acquisition is $665 million, paid in a combination of cash and equity. An additional payment of up to $300 million is contingent upon the firm’s performance through the year 2030, according to an official release from Goldman Sachs.

The transaction is anticipated to be finalized in the first quarter of the coming year. All 45 employees of Industry Ventures are expected to transition to roles within Goldman Sachs following the closure.

Shifting Landscape of Venture Capital Exits

The move by Goldman Sachs occurs as venture funds are increasingly exploring alternative exit strategies. A prolonged period of limited initial public offerings (IPOs) has prompted this shift, though IPO activity is now beginning to show signs of recovery.

Hans Swildens, founder and CEO of Industry Ventures, previously discussed on TechCrunch’s StrictlyVC Download podcast that tech buyout funds now represent 25% of all liquidity within the venture capital ecosystem.

He characterized this as “a huge chunk of liquidity,” indicating a substantial change in how venture-backed companies are realizing returns.

Adapting to New Liquidity Solutions

Swildens emphasized the need for venture managers to evolve their strategies. Traditional methods of investing in companies and awaiting an IPO or strategic acquisition may no longer be sufficient.

He stated that venture capitalists must proactively develop alternative liquidity solutions to ensure successful exits.

As of April, Swildens noted that at least five prominent venture funds had dedicated full-time personnel to creating these non-traditional exit opportunities, including secondary transactions, continuation funds, and buyouts.

He observed that leading funds are actively staffing and strategizing around new liquidity structures.

Goldman Sachs' Growth Strategy

This acquisition is intended to strengthen Goldman Sachs’ $540 billion alternatives investment platform, which the bank has identified as a crucial area for future growth.

David Solomon, CEO of Goldman Sachs, stated that Industry Ventures’ established relationships and venture capital expertise will complement existing investment capabilities.

He further explained that this combination will enhance opportunities for clients to access rapidly expanding companies and sectors globally.

Solomon added that the integration of Goldman Sachs’ global resources with Industry Ventures’ venture capital knowledge uniquely positions them to address the evolving needs of entrepreneurs, private tech companies, limited partners, and venture fund managers.

Industry Ventures' Investment Track Record

Industry Ventures reports having completed over 1,000 investments and currently holds stakes in more than 700 venture firms.

The firm also claims an impressive internal rate of return of 18%.