Investing in startups at different stages could help Goldman Sachs work with some of these same businesses when they go public through its investment banking divisions.
Goldman Sachs Group Inc. is considering raising a venture and growth fund of around $2 billion, a move that would make it a bigger player in the competitive world of technology investing, according to people familiar with the matter.
A $2 billion fund for investing in growth- and venture-stage companies would be one of larger ones in the industry and could give the bank an edge with large startups that are seeking big checks from investors. The bank is planning to start fundraising next year, the people said, asking not to be identified because the matter is private.
The conversations are early and the size of the fund could still change, the people said. A representative for Goldman Sachs declined to comment.
Other than SoftBank Group Corp.’s Vision Fund, which has about $100 billion, only a handful of firms have several billion dollars of venture and growth capital to invest. But it’s a space getting more crowded by hedge funds and venture firms that have expanded. Tiger Global Management, Sequoia Capital and TCV are among the firms with multibillion-dollar growth stage funds.
Some of Goldman Sachs’ high-net worth clients are expected to be among the limited partners in the fund, the people said. The bank is looking to make investments between $30 million to $200 million in companies, with an average size of about $50 million per deal, one of the people said. This new fund comes after Goldman reorganized its investing teams last year.
Now, most of the bank’s venture investing will be consolidated under the merchant bank’s growth equity team. That team has invested for several years across industries and has more than $8 billion under management, according to its website. Investing in startups at different stages could help Goldman Sachs work with some of these same businesses when they go public through its investment banking divisions.
Goldman Sachs has made a number of growth stage investments and has also made lucrative bets in Uber Technologies Inc. and Plaid Inc., when they were private. Uber went public last year and Plaid was acquired for $5.3 billion earlier this year.
Goldman still plans to make select early stage investments off its balance sheet, the people added. The Wall Street giant has identified the expansion of its private investing as a critical step in its ambitious growth plan unveiled at its debut investor day earlier this year.
The firm is aiming to manage more money for clients and reduce investments from its own balance sheet that could serve two goals: free up capital and provide a more consistent revenue stream from management fees.
Growth-stage investing is just one of the pillars under its newly reorganized merchant bank and it has already been active in the market with a new giant credit fund that could raise at least $10 billion. The other investing focus will be on infrastructure, real estate and private equity funds.