Business of Fintech

Goldman Sachs launches in-house incubator

  • Goldman Sachs is tapping into its expansive pool of tech talent to create new client solutions
  • In the war for tech talent, banks need to let tech employees to be more creative in their work
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Goldman Sachs launches in-house incubator

Goldman Sachs has launched an in-house incubator to allow its employees to bring innovative ideas and solutions to life, and to Goldman.

GS Accelerate is accepting applications for “ideas that can deliver best-in-class solutions for our clients, take Goldman Sachs into new business areas, manage risk and tackle inefficiencies in our operations,” according to an executive memo sent to staff Thursday and shared with Tearsheet. Goldman declined to comment further.

“Entrepreneurship has and always will be critical to our success,” said the memo, signed by CEO Lloyd Blankfein and his heir apparent, chief operating officer David Solomon. “GS Accelerate will provide yet another avenue for its expression.”

It’s not surprising for Goldman, which has proven itself a leader in running a technology-first business in the financial services industry, whose members are generally structured in deep vertical silos (even if they are turning things around now). One third of employees at Goldman Sachs are engineers, Blankfein said at Credit Suisse’s Annual Financial Services Forum last month. A breakdown by CB Insights shows many are in digital finance, with the highest amount for core platform roles, followed by operations engineering and then equities technology.  Externally Goldman has invested in every kind of fintech company — blockchain, data analytics, insurance, personal finance, wealth management, financial services software, lending, payments and settlement (in which has invested in six companies), real estate and regulatory technology. It’s currently invested in 23 startups.

It’s also unsurprising that Goldman would start to look in-house for that innovation — and not because it employs some of the best and the brightest. It’s in a talent war with Silicon Valley and letting engineers wear jeans to work is not going to make them stay.

“For the company that is a big deal,” an ex-bank employee said about work culture. “But for an engineer, the pay is generally competitive, but the working environment and the types of problems they get to solve absolutely aren’t.”

GS Accelerate is modeled after the company’s decades-old Principal Strategic Investments group. Like any incubator or accelerator program, the company will provide selected “teams” the capital, resources and support to develop their business plans and see them realized. Chief strategy officer Stephanie Cohen and her team will work with leaders across Goldman to review submissions and select teams of two to six people to participate in the incubator.

Cohen took the reins on the firmwide strategy team in November shortly after it outlined a three-year growth plan to add $5 billion in revenue — with 40 percent of that expected to come from lending, its consumer-facing Marcus unit is expected to play a big role.

The program is similar to JPMorgan Chase’s In-Residence program, which brings startup “residents” from the outside in and gives them access to its facilities, systems and expertise while JPM gets a front row seat to the latest in innovation and potential partnerships in the future.

GS Accelerate teams apply using an online application. If selected, they’ll later present their idea to divisional or regional groups to evaluate it, refine their business plan and pitch it to global leaders. When they get to the building stages of the business, they have the choice to go offline from their current roles or stay on as a chair and use funding to hire a team to run it.

“When it comes to entrepreneurship, there are always more failures than successes,” the memo said. “But if we’re creative, imaginative and learn from what did and didn’t work, GS Accelerate can become a powerful engine to bring important ideas to life.”

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