How Goldman Sachs Does SXSW
This is Erin Griffith will be filling in for Dan until Monday. Find me at (@eringriffith) or (erin.griffith@fortune.com).
I have no idea why Goldman Sachs invited me to their first-ever South by Southwest party, held on a rooftop. As it turned out, neither did most of the attendees I spoke with. Half of them had no connection to the party's hosts, which included the Wall Street giant and two venture capital firms. Almost everyone else had sneaked in from another party being thrown in the same building.
It wasn't tough to play "spot the banker." Among the typical techie crowd of young founders in startup t-shirts, flip-flops and wayfarers, a small handful of older men--sporting gelled hair, crisp button-ups, expensive blazers, khaki pants, and square-toed dress shoes--observed the action like party chaperones.
I approached the first bankerly types I spotted and asked point blank: "Do you guys know why Goldman Sachs would throw a party at South by Southwest?"
They did; turns out I had approached the two people from Goldman who'd organized the event. Their easy smiles turned cold once they spotted the "Press" label on my conference badge. One of them even moved his Oakley sunglasses, which had been hanging around his neck via neck strap, onto his face like a professional poker player trying to hide his thoughts.
Off the record, he told me, Goldman threw the party for some fluffy non-answer reason I cannot write because I agreed to talk off the record. "What's the on-the-record answer?" I asked. "We never go on the record," he said.
Left to speculate, I pushed my way through the rooftop, crowded with giant ferns, plush seating and sweaty bodies, until I noticed party swag scattered around on coffee tables. It was too perfect: friendship bracelets.
Goldman Sachs, the $83 billion "vampire squid" investment bank, came to tech geek nirvana to make new friends. Specifically, ascendant-tech-startup-entrepreneurs-who-might-consider-retaining-the-services-of-a-certain-investment-bank-when-they-sell-or-IPO friends.
"People think you have to be a Snapchat or Uber to work with Goldman Sachs. They just want to seem more accessible to earlier-stage companies," a venture investor in attendance told me. Which makes perfect sense.
Tech startups grow to unicorn size faster than ever. (Take Slack, which took just eight months to hit a $1 billion valuation.) Even Uber and Snapchat, which are worth a respective $41.2 billion and $15 billion, are young companies. The earlier in a startup's life that a bank like Goldman can buddy up to the next unicorn, the better its odds of being chosen to offer, say, a large debt placement to its high net worth clients (as Goldman recently did with Uber). With startups staying private longer than ever, more investors want to get in on that growth before they go public. The only way to do that is to have a good relationship with the startup. Thus, Goldman Sachs' friendship bracelets.
I didn't see many relationships being forged between the bankers and founders in the crowd, but that's not the point of a party at SXSW. The point is to have a presence. A stake in the ground that says you're innovative, or at least that you appreciate the innovation of others. This is why the biggest parties at SXSW were thrown by Fortune 500 companies that could hardly count as hot tech startups: McDonald's, Samsung, and yes, Goldman Sachs.
One party-goer complained that he wasn't able to find anyone from Goldman. It didn’t help that we had to shout over the thumping bass from a DJ mounted in the center of the roof. "Some name tags would help!" he yelled. I suggested he identify the bankers by their wardrobes. That strategy had a 100% hit rate for me.
THE BIG DEAL
• SunRun, a solar-energy company based in San Francisco, has tapped Credit Suisse Group AG and Goldman Sachs Group to go public later this year, according to the Wall Street Journal. The company has raised $300 million valuing it at $1.3 billion from Accel Partners, Foundation Capital, Madrone Capital Partners and Sequoia Capital. Read more.
VENTURE CAPITAL DEALS
• Draft, a New York-based real-money fantasy sports app has raised $3.5 million in Series A funding led by Upfront Ventures, along with Advancit Capital, BoxGroup, The Chernin Group and QueensBridge Venture Partners. playdraft.com/
• Playbuzz, a Tel Aviv-based creator of Facebook quizzes and lists, has raised $16 million in venture funding led by 83North. www.playbuzz.com/
• Tachyon Nexus, Berkeley, Calif.-based big data startup, has raised $7.5 million in Series A funding led by Andreessen Horowitz. www.tachyonnexus.com/
• Interset, an Ottawa, Canada-based analytics company, has raised $10 million in new funding led by Toba Capital and software company Informatica. Read more.
• Shuddle, a San Francisco-based car service app aimed at families and senior citizens, has raised $9.6 million in new funding led by RRE Ventures with participation from existing investors Comcast Ventures, Forerunner Ventures and Accel Partners. https://shuddle.us/
• Her, a London-based dating app for lesbians formerly known as Dattch, has raised $1 million in new funding from angel investors including Alexis Ohanian, Garry Tan and Michael Birch. weareher.com/
• Hypori, an Austin, Texas-based virtual mobile infrastructure company, raised $6.7 million in Series-A1 from investors including Green Visor Capital. www.hypori.com/
• Remitly, an online global remittance service, raised $12.5 million in Series B funding led by DFJ with participation from DN Capital and existing investors QED Investors and Trilogy Equity Partners. www.remitly.com/
• Conversa Health, a San Francisco-based provider of patient relationship management services, has raised $2.5 million in seed funding from angel investors. conversahealth.com/
• Clue, a Berlin-based female health app maker, has raised $2 million in venture funding from angel investors and Groupe Arnault. www.helloclue.com/
• Honest Dollar, an Austin-based financial technology startup, has raised $3 million in seed funding from Expansive Ventures, Formation 8, Core Innovation Capital and Aaron Patzer, founder of Mint. www.honestdollar.com/
• Fundbox, a San Francisco-based maker of a small business cash flow optimization tool, has raised $40 million in Series B funding led by General Catalyst Partners with participation from existing investors Khosla Ventures, Shlomo Kramer, Blumberg Capital and new investor NyCa Investment Partners. fundbox.com/
• Hungama, a Mumbai-based media company, is close to raising $100 million in funding from existing investors Intel Capital and Bessemer Venture Partners, according to TechCrunch. Read more.
• Sense, a San Francisco-based data science startup, has raised $1.1 million in seed funding from Granite Ventures, Illuminate Ventures, Susan Athey, Scott Banister, and Andrew McCollum. https://sense.io/
• Clinical Ink, a Winston-Salem, N.C.-based clinical trial service provider, has raised an undisclosed amount of funding from MPM Capital, F2 Ventures and FCA Venture Partners. Clinical Ink has announced plans to merge with Boston-based CentrosHealth, a provider of clinical trial mobile apps that was founded by MPM Capital. www.clinicalink.com/
PRIVATE EQUITY DEALS
• Renovus Capital Partners, a Wynnewood, Penn.-based private equity firm, has invested in Dolinka Group, an Irvine, Calif.-based provider of consulting services to K-12 schools. www.dolinkagroup.com/
• SK Capital Partners has acquired to acquire a controlling stake in Brescia, Italy-based wine ingredients company AEB Global from Investindustrial and AEB management, for an undisclosed amount. www.skcapitalpartners.com/
• Lone Star is expected to bid for Istituto Centrale Banche Popolari Italiane (ICBPI), the Italian banking services provider, alongside three consortiums of private equity bidders, according to Reuters. Read more.
IPOs
• GoDaddy has set the terms of its IPO. The Web hosting company will sell its shares for as much as $19 each, which will value it at $2.87 billion. The company, which is part-owned by KKR, will list itself on the New York Stock Exchange under “GDDY.” Read more.
• Auto Trader Group has sold shares on the London Stock Exchange at a valuation of £2.35 billion, or $3.5 billion. The British used car website is backed by Apax Partners. www.autotrader.com/
EXITS
• Overdrive, a Cleveland, Ohio-based ebook company which was founded in 1996, has sold to Rakuten, the Japanese ecommerce company, for $410 million. www.overdrive.com/
• LLR Partners will acquire Agility Recovery Solutions, a Charlotte, N.C.-based provider of disaster recovery solutions, from Generation Partners. The deal value was not disclosed. www.agilityrecovery.com/
• SurfEasy, an online privacy startup based in Toronto, has sold to Opera Software. The company had raised one round of funding from Angel One Investor Network, BrandProject, Comerica Bank, Mantella Venture Partners and MaRS Investment Accelerator Fund. www.surfeasy.com/
• Yieldex, a New York-based ad-tech startup, has sold to Appnexus, a New York-based programmatic ad company, for $100 million in cash and stock. Yieldex raised $18.5 million in venture backing from Hearst, Madrona Venture Group, Amazon and Sequel Venture Partners. www.yieldex.com/
• QuickCast, maker of a screencasting app, has sold to Lookback, a Mountain View, Calif.-based user experience management company, for an undisclosed amount. lookback.io
• Allianz SE has agreed to sell a stake of China Pacific Insurance Group to Goldman Sachs in a deal worth $700 million, according to Reuters. Allianz made investments in CPIC in 2009 and 2011. Read more.
OTHER DEALS
• Philips will spin off its lighting business through an IPO in the first half of next year, using the proceeds to invest in its HealthTech business. www philips.com/
• Ocwen Financial Corporation announced plans to sell the rights associated with $9.6 billion worth of residential mortgage balances to Walter Investment Management Corp., its subsidiary, for an undisclosed amount. www.ocwen.com/
FIRMS & FUNDS
• ARC Financial, a Canadian energy investor, is close to holding a first close on $789 million ($1 billion Canadian) for a new early stage investment fund, according to LBO Wire. The fund has a $1.25 billion hard cap. arcfinancial.com/
• Neuberger Berman Group’s private equity unit, Dyal Capital Partners, has acquired a passive 20% stake in Jana Partners, an activist hedge fund. www.janapartners.com/
• Vivo Capital, a Palo Alto-based healthcare investment firm has closed its eight fund, Vivo Capital Fund VIII at $750 million in commitments. www.vivocapital.net/
MOVING IN, UP, ON & OUT
• Kamran Ansari, a principal at Greycroft Partners, has joined Pinterest to lead corporate development. www.pinterest.com/
• Andy McLoughlin, co-founder of cloud collaboration service Huddle, has joined SoftTechVC as a partner. softtechvc.com/
• Tee Pruit has joined Santander InnoVentures, the newly formed corporate venture arm of Banco Santander Group based in London as an investment manager. Previously Pruit was a principal at C5 Capital and before that, Octopus Ventures. www.santander.com/
• Scott Peterman has joined the Hong Kong office of Jones Day as a partner in the Private Equity Practice. He was previously a partner at Sidley Austin. www.jonesday.com/
• Douglas J. Kramer has been appointed Deputy Administrator of the United States Small Business Administration. Previously he was General Counsel at the United States Agency for International Development.
• John McAdam, Sujal Patel and Steve Singh have joined Madrona Venture Group as strategic directors. McAdam is the CEO of F5 Networks, Patel is former CEO of Isilon Systems, and Singh is co-founder of Concur. www.madrona.com/
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