Interview, Fireside Chat
What’s Ahead for Growth Equity and Technology Investing
- Pandemic-driven acceleration: The sector views the last 18 months as delivering "two years of digital transformation in two months," fundamentally altering enterprise adoption of collaboration tools like Zoom and Microsoft Teams.
- Core investment verticals: Goldman Sachs' private investing business segments opportunities into four distinct themes:
- Enterprise Digitization: Focus on hyper-automation, artificial intelligence, and cybersecurity.
- Fintech: Expansion beyond basic payments into complex products like mortgages, life insurance, and healthcare.
- Healthcare: Reshaped by changing demographics, dynamic regulations, and disruptive technologies.
- Consumer: Structural shifts driven by Millennials and Gen Z forcing adoption of online practices in retail, leisure, and media.
- Food delivery trends: Online delivery platforms are transitioning from crisis tools to structural necessities:
- US-based DoorDash achieved 250% year-on-year growth, IPOing with a $60 billion valuation.
- European platform Walt operates in 23 countries, delivering triple-digit year-on-year growth with high repeat usage rates.
- Cybersecurity market dynamics:
- 40% of companies experienced a security breach last year due to increased remote work vectors.
- The global information security market is projected to grow by $125 billion this year.
- Macroscale investment thesis:
- Technological adoption rates are accelerating; smartphones reached 25% adoption in under five years compared to 25 years for television.
- Private software investment is growing exponentially relative to GDP, having overtaken investment in industrials.
- Online content consumption has surpassed hours spent watching traditional TV.
- Microscale valuation considerations:
- Private companies often exhibit 80%, 100%, or 200%+ growth rates, allowing rapid growth into high valuations.
- Private valuations are less influenced by short-term public market technicals than their public counterparts.
- EMEA market growth:
- Venture capital funding into European technology has outpaced US and China growth rates by three times over the last three years (though from a lower base).
- The number of EMEA "unicorns" (companies valued over $1 billion) has surged to over 100 in the last year.
- Investment strategy focuses on helping European companies expand geographically into deep US and Asian markets.
- Investment challenges and methodology:
- Long-term investors acknowledge the inability to predict 3–5 year horizons, necessitating deep diligence beyond unit economics.
- Growth equity positions typically involve minority stakes, requiring alignment on vision, strategy, and the willingness to pivot.
- Investors liken the process to "getting married," emphasizing collective journey management and iterative risk-taking.
- Management selection criteria:
- Resiliency: The capacity to recover from setbacks and persist through difficult periods.
- Communication: Ability to inspire teams with a clear vision and direction.
- Collaboration: Proactive seeking of advice, debate with diverse viewpoints, and decisive leadership.
- Passion: Essential for sustaining the energy required to drive long-term growth.
- Chemistry: Strong interpersonal alignment between investors and founders is deemed critical for success.