Need to Know
- At $2 billion, the new venture and growth fund would be one of the largest in the world run by a financial institution.
- Goldman Sachs would be able to court larger investors and make significant investments in private companies and tech firms at different growth stages.
- Funds such as these also offer a talent and M&A funnel that Goldman Sachs can use to its advantage.
- Reports indicate the funding could begin early next year.
U.S. bank Goldman Sachs is considering raising a $2 billion fund that would allow it to be a more competitive investor in the technology world, according to a new report in Bloomberg.
Goldman Sachs has made lucrative growth-stage investments in the past, including investments in both Uber and Plaid when both companies were private.
The fund, if completely earmarked for investing in tech and startups, would be one of the largest in the industry, giving Goldman Sachs a leading edge in the competitive world of startup investment. It would also allow the bank flexibility to offer funding at different stages in startups’ growth. This, in turn, could benefit Goldman Sachs (and its investors) in the long run, as it could result in Goldman Sachs working with some of these businesses as they go from private investment stages to public offerings. Bloomberg’s report on the Goldman Sachs $2 billion tech fund was not directly confirmed by the bank; Bloomberg’s sources remained private, as the fund is still in early stages. The sources did note that Some of Goldman Sachs’ high-net-worth clients are expected to be partners in the fund and that the bank is looking to make investments of $30 million to $200 million in companies, with an average size of about $50 million.
Growth-stage investing is only part of Goldman Sachs’ newly reorganized merchant bank. The bank has already been active in the technology market with a new giant credit fund, which is expected to raise at least $10 billion. Additional investing pillars will be infrastructure, real estate, and private equity.
Per the Bloomberg report, Goldman Sachs is planning to begin fundraising for the $2 billion fund early next year.
While the Goldman Sachs fund would be one of the largest of its kind, the bank is not alone in greater prioritization of startup investing. SoftBank’s Vision Fund has $100 billion; Tiger Global Management, Sequoia Capital and TCV are other firms that have multi-billion dollar funds.