ZocDoc just announced a surprise extra $25 million on top of the $50 million the startup recently raised from Yuri Milner and DST, and the money came from high places–Goldman Sachs is investing directly in ZocDoc. That is to say, not through Goldman Sachs Investment Partners and not through Goldman’s Principal Investment Area, but with money off its own balance sheets, ZocDoc CEO Cyrus Massoumi told Betabeat.
One of ZocDoc’s first angel investors works at Goldman Sachs in a “unique position,” Mr. Massoumi said. Goldman also manages some of ZocDoc’s finances, and can be expected to handle or at least advise them on any acquisitions ZocDoc might make in the future. Plus ZocDoc’s executives have personal friends at the firm, Mr. Massoumi said. (He and co-founder Dr. Oliver Kharraz used to be closer to that world–the two previously worked at the consulting firm McKinsey & Company, and continued to wear suits and ties after starting ZocDoc until a friend told them they looked too much “like consultants” to be entrepreneurs, which prompted them to hit the Gap.)
“We’re just really excited,” he said. “There is not a large healthcare institution domestically, perhaps internationally, that does not have a relationship with Goldman Sachs.”
Talks with Goldman started a few weeks ago, in a “mutual conversation,” after the DST investment, Mr. Massoumi said.
Often when a private equity firm or investment bank gets involved with a tech startup, the expectation is that an IPO is around the corner. ZocDoc is expanding fast and hard, recently launching in Boston, where the average wait time to see a doctor is 50 days.
ZocDoc wants to spend its Series C funding on reaching all 51 U.S. markets, Mr. Massoumi said. ‘It’s important to us that we keep the promise that we’ve made and make sure that ZocDoc is accessible in as many places around the country as possible, as quickly as possible.”
But wouldn’t an IPO to raise a quick pile of cash help with that?
“It’s not something we’re really thinking about,” he said. “I would not expect that from us. We’re not planning to go public any time soon.”
And why not?
“We don’t have to,” Mr. Massoumi said.
So $75 million is enough?
“I thought $50 million was going to be enough,” he said.
Betabeat happened to ask the IPO question of Mr. Massoumi’s co-founder, Oliver Kharraz, who kept the secret of the Goldman funding impeccably under his hat when we visited ZocDoc’s office last week. Dr. Kharraz said the same thing–ZocDoc isn’t thinking of an IPO, the founders aren’t thinking of an exit.
This partnership struck Betabeat as having several additional advantages:
-Goldman’s early investment puts it in a good position to eventually underwrite the company’s IPO
-the partnership with Goldman could gives ZocDoc’s early investors some options for liquidating their stakes, while allowing ZocDoc’s executives to have some control over how and when that happens
-optics! Goldman hardly invests in tech startups, and rarely at such paltry levels. The last company we recall getting a Goldman investment was … Facebook. And remember who co-invested in that deal?
ZocDoc earns $250 a month for every doctor in the system (which is why it keeps the number of doctors closely guaded). TechCrunch reported that ZocDoc, which has raised a total of $95 million to date, was valued at $700 million before the DST investment.