Goldman Sachs arm bullish on Indian financial tech startups

The arm is looking to invest between $2-10 million for a minority stake

With the Indian startup ecosystem growing rapidly, an arm of Wall Street investment bank Goldman Sachs said Tuesday it is bullish on the space and will be scouting to invest up to $10 million in domestic financial technology companies.

Goldman Sachs Principal Strategic Investments (GSPSI), which invests from the bank's balance sheet, has two 'legacy investments' in the country, including in NSE and NCDEX, its head Alokik Advani said.

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While GSPSI continues to manage these investments, it is the new opportunities that the arm is excited about and is looking to invest between $2-10 million for a minority stake, he said, adding that it is in discussions with some companies.

The announcement comes amid a focused thrust on developing the startup ecosystem, which has seen the government launch the 'Startup India' initiative.

Advani said PSI looks for businesses in the financial technology space which can benefit by associating with its parent. Typically, before taking a stake, the relationship with a startup begins with Goldman Sachs becoming a client, he said.

GS already has sizeable presence in India's startup hub Bengaluru and PSI is looking at the city as a centre for innovation, he said.

Though it has a wide range of segments it invests in, Advani said companies in data analytics and machine learning space interest PSI.

It is also looking at trading technology, market infrastructure, information services, security software and payments, among other areas.

When asked about valuations, he said the expectations are coming down with people becoming more realistic.

PSI, which has a portfolio of 75 investments including 12 in the Asia Pacific region, stays invested for over five years and will look for a board seat on the company for its minority investment, he added.

Advani, however, refused to give any targets on investments, saying PSI does not operate like a private equity fund, is very opportunistic and generally takes longer to close deals.

PSI is already in discussions with bodies such as Nasscom and startups think-tank iSpirit, Advani said, adding that partnering with colleges and educational institutions which are producing new ventures also makes sense for it in India.

At present, it has a 20-member global team looking at operations and the Indian investments will be made by a team in Hong Kong.

Advani declined to comment on its investment in NSE, which is headed for an IPO, but said it "continues to work with NSE management in every shape and way we can on their strategic roadmap.