Hustler Words – In a move signaling a significant shift in the venture capital landscape, Goldman Sachs is set to acquire Industry Ventures, a San Francisco-based investment firm managing $7 billion in assets, for a deal potentially reaching $965 million. The acquisition, initially reported by CNBC, highlights the growing importance of alternative exit strategies for venture funds as traditional avenues like IPOs remain challenging.
The deal structure involves an initial payment of $665 million in cash and equity, with an additional $300 million contingent upon Industry Ventures’ performance through 2030, according to a statement from Goldman Sachs. The transaction is expected to finalize in the first quarter of the coming year, with all 45 Industry Ventures employees transitioning to Goldman Sachs.
This acquisition arrives at a time when venture capital firms are increasingly exploring non-traditional exit options due to a prolonged drought in initial public offerings. Hans Swildens, founder and CEO of Industry Ventures, noted on the StrictlyVC Download podcast earlier this year that tech buyout funds now represent a substantial 25% of all liquidity within the venture ecosystem.
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Swildens emphasized the need for venture managers to adapt to the changing environment. He stated that the traditional approach of investing in companies and waiting for an IPO or strategic M&A exit is becoming less viable. Instead, VCs must actively pursue alternative liquidity solutions.
As of April, Swildens observed that numerous prominent venture funds were actively building teams dedicated to generating non-traditional exits, including secondary transactions, continuation funds, and buyouts. He emphasized that leading funds were prioritizing staffing and developing liquidity structures.
Goldman Sachs’ motivation behind the acquisition is to strengthen its $540 billion alternatives investment platform, which the bank views as a critical driver of future growth.
"Industry Ventures’ trusted relationships and venture capital expertise complement our existing investing franchises and expand opportunities for clients to access the fastest-growing companies and sectors in the world," stated Goldman Sachs CEO David Solomon. He further added that the combination of Goldman Sachs’ global resources with Industry Ventures’ venture capital expertise will uniquely position the firm to serve the evolving needs of entrepreneurs, private technology companies, limited partners, and venture fund managers.
Industry Ventures reports having made over 1,000 investments, holding stakes in more than 700 venture firms, and achieving an internal rate of return of 18%.
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