Over the past several years, Goldman Sachs has made a number of private investments into tech companies including Spotify, Flipboard, Lookout and perhaps most notably, Uber. While traditionally perceived as an adviser to M&A and IPO candidates, the financial services behemoth is now also one of tech’s active investors and counts many Tech IPO Pipeline companies in its portfolio.
Like competitive peer JPMorgan Chase, Goldman Sachs has also ventured into Fin Tech startup investing. JPMorgan Chase CEO Jamie Dimon recently stated that Silicon Valley is coming for banking and and we’d previously looked at the startups disrupting JPMorgan Chase. Goldman has been sounding similar alarms. The equity research report issued in March estimates that $4.7 trillion in revenue for financial services firms is at risk of being displaced by new tech-enabled or fin tech company entrants. The report states:
“First generation online financial services companies … traditional banks, asset managers, and payments companies are all working to adapt to these behavioral, demographic, and technologic realities. We expect partnerships, acquisitions, and competition will be key to the way the vertical develops.”
Goldman is clearly heeding its own warnings as can be seen below. Using CB Insights Business Social Graph, we analyzed where Goldman Sachs was placing its bets within the FinTech space.
The startups Goldman Sachs is investing in
Goldman Sachs has been very active on the investment front over the past five years. In tech, its deals have been spread across myriad industries – many of which have come as the result of it being a traditional financial investor. Last year, for example, Goldman Sachs got a boost from a large stake in Mobileye.
In 2015, Goldman’s tech deals include Oscar Health Insurance, pre-launch eCommerce firm Jet.com, hot container startup Docker and mobile search company Quixey. The Business Social Graph below highlights the investments and debt/credit facilities Goldman Sachs has made to startups since 2009.
Big data & payments – focus areas in Fin Tech
Within Fin Tech specifically, Goldman has focused on a couple of areas.
- Payments – One is payments tech, where Goldman has made investments into Square (including in its latest $150M round at a $6B valuation), payments security firm Bluefin Payments (where it made a debt and equity growth financing in Dec. 2014), and payments platform Revolution Money, acquired by American Express in 2010. Goldman also co-led a $25M Series C deal to bill presentment and payment startup Billtrust in April.
- Big data – Another area where Goldman has been active in is the intersection of big data and finance – a category where it has done deals including social media data analysis firm Dataminr, valued at $700M in its latest round, financial data engineering startup Kensho Technologies and predictive data analytics firm Context Relevant. Indeed, big data is a broader investing interest of Goldman’s. After leading a $56M round into Asia big data analytics firm Antuit, Ankur Sahu, co-head of private equity at Goldman Sachs in Asia, said that “big data analytics can be the next wave of global services and… the market has tremendous growth potential.”
Interestingly, unlike JPMorgan which has avoided bitcoin/blockchain/cryptocurrency companies, Goldman has made a big move into the digital currency/bitcoin space as a lead investor in bitcoin payments startup Circle Internet Financial‘s latest $50M financing. The deal is notable as it marks the first investment by a bulge bracket bank in a blockchain or digital currency startup.
The visualization below highlights Goldman’s Fin Tech moves and the investment themes they do or don’t fall into.
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