Business Startups Venture

A Look at Goldman Sachs’ Venture Funding Spree

On Wednesday, Swiss cybersecurity startup Acronis announced a $147 million investment round led by Goldman Sachs.

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It’s a big round for sure. But what was even more noteworthy was who led the round. Acronis is just one of 58 known companies so far this year that have received venture funding from the global investment banking firm.

The Process

Before we get into specifics, allow me to tell how the idea for the story came about. We get a lot of pitches and press releases. In recent months, I noticed there was a large number of fundings that were either led by, or included participation from, Goldman Sachs. It felt like literally every time I opened my inbox there was mention of another deal funded by Goldman Sachs.

So I asked our data guru Jason Rowley to do some digging in the Crunchbase database. (I also reached out directly to Goldman Sachs but the firm declined to comment). And what he found was exactly what I expected: Goldman Sach’s pace of investing in startups has increased dramatically over the last couple of years.

You can see for yourself in this lovely chart he made below:

To further break it down, Crunchbase data shows that Goldman Sachs has invested in 20 companies so far in the third quarter. It backed 21 companies in Q2, and 17 in Q1. That’s a total of 58 venture investments this year so far.

That’s in line with how many companies the firm invested in during the first three quarters of 2018 (60). Overall, in 2018, Goldman Sachs backed 83 companies, according to Crunchbase data. That’s up significantly (53.7 percent to be exact) from the 54 it invested in in 2017. For context, it’s also sharply higher than the 37 companies Goldman put money in five years ago (in 2014), and the 10 it invested in a decade ago (2009).

Goldman is on track to match its record-setting 2018 in 2019, reaching what could be a new normal for a financial institution more associated with banking than venture investing.

Market Impact

Where is Goldman putting money to work? Some of its recent deals include Canadian cybersecurity startup Trulioo (which we covered here);  GitLab; insurtech startup Ethos (which we reported on here), and H2O.ai (which we covered here).

It also put money in online mortgage lender Better.com this year.

I was curious as to what kind of value that having Goldman Sachs as an investor could bring. So I asked a few of these companies. Not surprisingly, they were quite positive in what they had to say.

Vishal Garg, CEO and founder of Better.com, said Goldman Sachs actually invested in his company’s first round of financing in 2015.

The firm has helped Better.com create a profitable revenue stream that also allows it to deliver “the most affordable rates to our customers,” Garg said.

Goldman Sachs has also helped in “all aspects” of Better.com’s growth and business strategy, he added, from building out its B2B platform and helping build trust and credibility with its customers.

Phill Rosen, CEO of new portfolio company Even Financial, considers Goldman Sachs to be a “highly sought-after investor” that has “a long history of exceptional institutional experience combined with sophisticated technological abilities.”

Vineet Jain, CEO and co-founder of Egnyte (which Goldman Sachs invested in last year), said having the firm as an investor has given his company a “vote of confidence” in its strategy and what it’s accomplished to date. Further, he sees its involvement as an investor opening the door “to several opportunities going forward.”

“They are a company with a proven track record of investing in growth-stage companies and providing the support needed to get them to a billion-dollar valuation and we truly believe we’re well on our way,” he wrote via email. “Goldman Sachs has helped us increase our global presence, expand our global footprint and provided us with the resources needed to disrupt a crowded marketplace by improving and expanding on our product.”

A recent Bloomberg editorial written by Matt Levine (who used to work for Goldman Sachs) surmised that the investment banking firm wants “to be cool again.” I’m not sure I can speak to that necessarily, but the firm clearly wants to be a big player in the venture world. Whether it makes the mark will be determined by its returns.

More in five years, then.

Illustration: Li-Anne Dias

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