AI investment boom creates new demand, Goldman Sachs builds private equity direct investment platform for wealthy individuals
Goldman Sachs has reportedly created a new platform to expand services to high-net-worth clients and family offices who are increasingly demanding direct stakes in fast-growing unlisted companies. The new "alternative investment platform" will integrate Goldman's existing alternative assets business with two new teams, according to an internal memo. The memo shows that the new team will focus on direct investments in individual unlisted companies (rather than traditional private equity fund products), while assisting clients in buying and selling these stakes. Kristin Olson, global head of alternative investments for Goldman Sachs' wealth management business, said in an interview: "The market's focus on large growth technology companies has been very high, and clients want to have access to investment opportunities before they go public." Goldman's move follows two trends reshaping Wall Street. On the one hand, the bank has continued to invest in wealth management and asset management businesses for many years because these businesses are considered to bring more stable income than investment banking and trading businesses; on the other hand, today's most successful start-ups have remained unlisted for longer than before, allowing early investors to capture most of the returns before the public enters the market. "There are companies that are going public with trillion-dollar valuations," Olson said. "If you don't invest in them as they grow, you're obviously missing out on a huge piece of the growth cycle." AI craze adds fuel to the fire Olson said that Goldman Sachs has been arranging direct investments in late-stage unlisted companies for high-net-worth clients for about 20 years. Early cases include Facebook before its IPO in 2012, and later SpaceX, Stripe and Canva. But she added that client demand for the asset class continued to grow, ultimately prompting management's decision to spin off the business. Olson said Goldman's goal is to help clients identify the potential of entrepreneurs before they become household names. She pointed out that Goldman Sachs usually does not target early-stage startups, but instead focuses on later-stage companies with mature products, considerable revenue and a clear path to profitability, pursuing what she calls the "sweet spot" between risk and return. The AI investment boom is further driving up this demand. Olson said that in addition to leading model developers, Goldman Sachs is increasingly guiding clients to invest in the infrastructure supporting AI, including data centers and related projects. The business launch comes just after Goldman Sachs reported record quarterly revenue, with company executives repeatedly emphasizing that AI-related activities have driven growth in investment banking, trading and financing. The results further reinforced investors' view that Goldman Sachs is well-positioned to benefit from multiple parts of the AI investment cycle. This adjustment also formally established a growing business direction: helping clients find liquidity exit channels for their private equity investments. Through the new secondary advisory group, Goldman Sachs plans to expand a trading market that allows clients to buy and sell private equity positions, while also providing advisory services to clients who want to exit investments outside the Goldman Sachs system. Olson said: "We decided to separate this business and make it one of our key directions."