Goldman Sachs acquires Industry Ventures for up to $965 million as alternative venture capital exits increase

Goldman Sachs has agreed to acquire Industry Ventures, a 25-year-old San Francisco-based investment firm with $7 billion in assets under management, CNBC reported. First to report on monday. The deal underscores the growing importance of secondary markets and acquisitions, as exits from traditional ventures remain slow.

The investment bank is paying $665 million in cash and stock, with up to another $300 million tied to the company’s performance through 2030, according to a statement from Goldman Sachs. The deal is expected to close in the first quarter of next year, and all 45 Industry Ventures employees are expected to join Goldman.

We’ve reached out to Swildens for more information.

The acquisition comes at a time when investment funds are increasingly turning to unconventional exits amid a long drought in IPOs. Speaking on TechCrunch StrictlyVC podcast download Earlier this year, Hans Sweldens, founder and CEO of Industry Ventures, said that technology buyout funds now account for 25% of the total liquidity in the entire venture ecosystem — “a huge chunk of liquidity,” he said.

Project managers are having to adapt their approach, Sweldens explained. “Just going out and seeing companies, putting them in your fund and then waiting for an IPO or a strategic M&A exit is probably not going to work anymore,” he said in a podcast interview. “(Venture capital firms) need to start working on alternative liquidity solutions.”

At the time — in April — he noted that at least five major investment funds had hired full-time staff dedicated to manufacturing non-traditional exits, including secondary transactions, continuation funds, and buyouts. “The branded funds are all employees and thinking through liquidity structures,” Sweldens said.

Goldman Sachs is making the acquisition to bolster its $540 billion alternative investment platform, which the bank has identified as a key growth driver.

“Industry Ventures’ trusted relationships and venture capital expertise complement our existing investment franchises and expand opportunities for clients to access 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 with 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, has stakes in more than 700 investment companies, and boasts an internal rate of return of 18%.