Goldman Sachs looking to splash the cash: inside their extension into the fintech space
Tuesday 25th August 2020
Goldman Sachs is debating setting up a $2 billion venture and growth fund that would invest in tech startups, which would boost their presence in the tech space. Bar Softbank’s $100 billion Vision Fund, not many firms have contemplated investing this amount of capital into the tech space, and it follows the boom of the tech industry since the pandemic started.
The tech industry, alongside big pharma, has been one of the winners of the pandemic, and the establishment of the fund would see Goldman build up relationships with bigger investors and more significant investments.
This follows the news that Goldman is one of the bidders for General Motors Co’s credit card unit, as they are looking to expand their consumer banking arm which is comparatively weak when contrasted with the likes of JP Morgan and Citigroup. Fintech has seen a rise in investment recently as the likes of Quantexa and Viva Wallet have had incredibly successful fundraising rounds in the past month. Fintech undoubtedly has dominated the London tech fundraising scene, accounting for 39% of venture capital investment so far this year.
Goldman is in a good place to start up new funds and to make bids, as they earned as much in the second quarter of 2020 as they did in 2019. Having shored up a significant amount in capital reserves before the pandemic, they are in a good place to profit as the global recession hits.
Other tech news
The UK’s Future Fund, a scheme set up by the government to support startups amid the pandemic, has processed hundreds of applications. By June it had approved over 250 convertible loans, and several fintechs such as Habito, Fronted and CapitalRise have joined the scheme. With companies such as Klarna and Robinhood thriving in the space, fostering startups right now not only reduces the scepticism surrounding fintech, but also increases competition in the space.
Particularly following the Wirecard scandal, and with large names such as Starling Bank, Revolut and Monzo introducing new features to stay relevant within the space, the increased investment into technology could significantly change the way we spend our money in the future. Facebook and Ant Group have also been looking to push forward their cryptocurrency, so traditional financial institutions will need to find ways to keep up and remain relevant.
