In Most Active Corporate Investor Ranks, A Wall St Takeover Looms

Startups have long been a source of fresh talent and technology for corporations, by way of acquisition. But by investing in startups, corporations are sometimes able to generate outsized returns while also investing in the companies that enrich their platforms (think Slack’s venture fund) or are otherwise aligned with the corporation’s interests.

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Bigger companies have, to some extent or another, been investing in startups since the turn of the twentieth century. Over the years, the pace has picked up considerably. U.S. blue chips are on pace to set a record for venture and PE investing this year.

To this end, we set out to find out which corporations made the most venture investments so far in 2018.

Based on recently pulled investment data from Crunchbase, we totaled corporate venture investments made directly by the corporation as well as its subsidiary venture investment funds. Our findings can be found in the chart below.

In Crunchbase News’s prior forays into covering prolific corporate investors, we’ve found that big technology companies were typically top-ranked on counts of investments as well as exits, and acquisitions.

In a way, that’s no different here. Alphabet and its maze of investment-making subsidiaries (including Google, GV, CapitalG, and others) comes out on top so far this year. Intel Capital, historically among the most prolific venture investors, corporate or not, comes in third. Salesforce, which mostly investments out of its Salesforce Ventures arm, is ranked fourth overall so far.1 And Amazon, which so far this year has made 27 publicly-disclosed venture investments out of its Amazon Alexa Fund alone, comes in to round out the top five.

However, the real surprise here is Goldman Sachs, which has participated in enough venture deals to land the investment bank firmly in the number two spot so far in 2018. Although Goldman Sachs is not a corporate venture investor in the traditional sense (even when compared to other big banks, many of which run their own venture funds), it’s nonetheless a corporation investing in startups.

And boy has GS2 ramped up its venture investing pace over time.

So far in 2018, Goldman Sachs has disclosed 52 venture and PE deals—the most activity on Goldman Sach’s private market desk since the Dot Com bubble. But it’s still far from its prior peak of 117 venture and PE deals made in 2000.

In Q3 2018, Goldman Sachs has made more venture and PE deals than any time in the past decade. GS’s disclosed private-market deal volume is currently higher than it was in Q1 2008, right before the financial crisis came to a head when Bear Stearns and Lehman Brothers collapsed.

The investment bank has also cashed out on some prior investments this year.

Spotify is a decent example. Goldman led Spotify’s $100 million Series E round in 2012, which valued the company at $3 billion post-money. The asset manager sold off “less than half its stake” in the then-private music streaming company for $75 million in August 2017 at a valuation of about $13 billion. Spotify listed its shares publicly this year and is currently valued at approximately $33.2 billion at time of writing, according to Yahoo Finance.

But Goldman Sachs isn’t the only major Wall Street firm to dive headlong into private-market investing either.

JP Morgan Chase’s 2018 venture exits include positions in Dropbox, SurveyMonkey, and Xiaomi. Morgan Stanley was a co-investor with JP Morgan, and additionally was exposed to Flipkart’s sale to Walmart and Domo’s rather ignominious IPO.

Two subsidiaries of Fidelity Investments—health-focused investment fund F-Prime Capital Partners and growth-stage investor Fidelity Management And Research Company—are also investing at near-record pace. F-Prime’s Q3 2018 investment count—11, at time of writing—is level with prior highs.

Mentioning these historical high water marks isn’t to say we’re in a bubble right now.. But we are in the midst of a historic reorientation in the startup market, and the fact that fuddy-duddy Wall Street firms with deep pockets and connections to public markets are now among the most active investors is testament to that shift.

Illustration: Li-Anne Dias