Goldman Sachs is investing $20 million in $1.1 billion startup GitLab because the bank's engineers loved it so much: 'They were so happy as a customer' (GS)

gitlab founders

Goldman Sachs has invested $20 million into the development and operations platform GitLab, adding to a Series D funding round that valued the startup at $1.1 billion.
While Goldman has been making strategic tech investments for about two decades, GitLab was unique because the investment was driven by the bank's own engineering team.
Goldman's tech team started using GitLab on its projects at the beginning of 2018.
GitLab is seen as a leading upstart rival to GitHub, the code-sharing company that Microsoft bought for $7.5 billion this year.

Goldman Sachs is investing $20 million into GitLab, just months after the software startup announced a mega Series D funding round at a $1.1 billion valuation.

Goldman's add-on investment brings GitLab's total Series D funding up to $110 million. The round was led by Iconiq Capital, Mark Zuckerberg's personal money-management firm. Alphabet's GV, which led GitLab's last funding round in 2017, also participated.

"I think this investment is really special because it's [Goldman's] actual engineering team that said, 'We want to invest in this,'" GitLab CEO Sid Sijbrandij told Business Insider. "They were so happy as a customer that they were like, yes, this is the future."

Sijbrandij said the funding would be used to ensure GitLab is "best in class" in each of the product categories it competes in — its rivals include Microsoft subsidiary GitHub and Atlassian's Bitbucket. To achieve its goals, Sijbrandij said, GitLab will double its headcount over the next year, after already doubling its staff in 2018.

The funding came out of Goldman's Principal Strategic Investments group, a division that focuses on investing the bank's money into technology companies that are strategically useful for the banking industry.

When it first launched, in the late 1990s, the group focused on market infrastructure and trading technologies, though the unit has since expanded to include areas like fintech, security, and enterprise investments, among others.

One of the most recent of its prolific tech investments is Symphony, a secure instant-messaging system built for financial institutions that was designed to challenge the dominance of the Bloomberg Terminal.

Goldman will advise GitLab on product

Like its competitor GitHub, which sold to Microsoft for $7.5 billion in June, GitLab is a software-developer platform built around an open-source technology called Git. It allows large groups of programmers to all work on the same piece of software without getting in one another's way, and it's an important part of how software gets made today.

Goldman started using GitLab internally in early 2018. What started out as tool used on small projects quickly got pushed out to the bank's entire engineering organization.

Now the two companies enjoy a close relationship: Goldman advises GitLab on how to shape its tools for the compliance needs of financial institutions, and GitLab builds Goldman new tools to suit its needs.

"They will be very active in guiding us on how to make a better product that is as compliant as possible and that helps with governance and best practices," Sijbranij said.

The two teams have already worked together on new tools, such as a security feature that requires multiple administrators to approve code before it's deployed. They have also worked on security protocols that actively scan code for flaws as it is written.

While many of these tools have already existed out in the world in some form or another, Sijbranij said, GitLab streamlines them all into one integrated platform.

"That's the problem we're solving — we're not inventing anything that hasn't been done before, but making sure all of those 30 tools are in one interface," Sijbrandij said.

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