There’s perhaps no bank more controversial than the investment firm Goldman Sachs, for its role in the financial crisis of 2008. So there’s probably some small irony in Goldman’s latest area of focus: financial startups.
Over the past few years, Goldman has invested hundreds of millions of dollars in far-flung assortment of payments and alternative finance companies including Square, Bluefin Payments, Bill Trust, Revolution Money, as well as newly public OnDeck Capital, an Inc. 5000 company. It’s also ventured into digital money, including the bitcoin startup Circle Internet Financial, venture capital research company CB Insights reports.
In a March investment note, Goldman said that old-guard financial firms, like itself, are in danger of losing $4.7 trillion to new financial technology startups, and suggested partnerships and acquisitions were an important way for such companies to gain a foothold.
That's something of a departure from its earlier, more broad-based tech investment strategy, which includes rounds in newly-minted tech stars including Uber, whose value just topped $50 billion, as well as Dropbox and Spotify.
Between 2009 and 2013, Goldman participated in 63 disclosed investment deals, worth nearly $4 billion, according to CB Insight's most recent research. The Wall Street bank also prefers late-stage investments in unicorns such as Dropbox and Uber. (Its 2012 investment in Facebook, where Goldman was part of a $1.5 billion round, valued the company at $50 billion.)
In 2014, Goldman was also the top investment bank underwriting IPOs, netting nearly $5 billion in fees from public offerings.
In 2008, at the height of the financial crisis, Goldman converted to a bank holding company so it could benefit from the Troubled Asset Relief Program (TARP) that helped banks get troubled mortgages off their books. In 2009, it launched a charitable donation program, called 10,000 Small Businesses, worth $500 million. The program funded community development financial institutions that help small businesses with financing, as well as provided financing through other local entities. The program was seen in some circles as a publicity stunt aimed at quelling popular anger over its rich executive compensation packages, reportedly worth $16 billion in 2009, following a $10 billion infusion from the federal government.