JPMorgan’s project will push the bank further into the market serving private companies

JP Morgan CEO Jamie Dimon speaks during the opening of the new French headquarters of US bank JP Morgan on June 29, 2021 in Paris.

Michael Euler | AFP | fake images

JPMorgan Chase is preparing to bet everything on private companies.

For the past year, the bank has been hiring programmers and building products for a new fintech business that aims to provide a variety of services to startups and investors around the world, according to people familiar with the matter.

The business, known internally by the codename “Project Bloom” because of its goal of helping early-stage private companies grow, is led by Michael Elanjian, head of digital private markets, said the people, who declined to comment. be identified by speaking to their pitch.

JPMorgan, the largest US bank by assets, surprised last month when it said spending would rise this year, in part because of an annual technology budget that has grown to at least $12bn. CEO Jamie Dimon is investing aggressively to help his bank battle fintech companies, and executives see an opportunity to create a winner in private markets before startups can dominate the space.

A key part of Project Bloom is a digital network for JPMorgan clients that will connect startups with investors, helping them in fundraising rounds, the people said. Other planned services include helping companies sell shares in public offerings or providing private equity loans, offering a digital interface for secondary trading of private company shares, and helping venture capital firms raise new funds.

While elements of these offerings exist in parts of JPMorgan’s sprawling operations, the new effort aims to create a single digital portal for startups and venture capital firms, family offices and other institutional investors, the people said. .

The deal aims to link offers from the company’s corporate and investment bank, commercial bank and private bank. For example, the private markets trading desk first reported by CNBC in 2020 will be brought onto the new platform, according to the sources.

By creating a self-service platform, JPMorgan can target smaller and earlier-stage companies than its bankers traditionally engage, helping them raise funds and offering automated recommendations, the people said.

JPMorgan’s move comes as the number of private companies being created continues to rise. Investors are funneling billions of dollars into the asset class in hopes of catching companies before they mature and their growth prospects level off, with startups being held private for much longer due to near-unlimited access to capital. .

Since the start of the pandemic in 2020, the number of unicorns, or private companies valued at $1 billion or more, has more than doubled to 1,032, collectively valued at $3.4 trillion, according to data provider CB Insights.

That has raised the fortunes of startups like Carta, Brex and Forge that cater to private companies in one way or another. Historically, banks have geared their services to more established public companies and startups approaching public listings, leading to the rise of specialized providers.

Now, JPMorgan appears to be betting that if it can create a full-scale network of private companies before fintechs do, its place in a future where private companies will matter even more will be assured.

stealth mode

JPMorgan’s new business has grown to approximately 80 employees operating in stealth mode, separated from other JPMorgan employees in more than half a dozen cities around the world, including New York and New Jersey; flat, texas; Chicago; Glasgow; London and Buenos Aires, people said.

The bank is in the midst of a hiring spree, seeking 200 employees for the private markets business by the end of the year and looking specifically for software engineers, AI experts and data experts, according to job postings.

“We are building an exciting new high-profile data-driven fintech business for the firm, with the goal of creating a market-leading platform for private markets,” the bank said in a job posting. The team “building the product brings together data scientists, finance specialists, former entrepreneurs, product managers, designers, and engineers, working together with the benefits of a startup culture that can leverage JPM’s scale.”

Another job posting, this one for a business development manager, said the bank was looking for “individuals with business experience” as founders and investors to help it acquire clients for the business, called Digital Private Markets.

In response to queries, JPMorgan spokeswoman Jessica Francisco had this response: “We have been a leader in the private equity markets for years and see an opportunity to bring new digital capabilities to companies and private investors.”

Word of the project began circulating within JPMorgan and among competitors earlier this month after Elanjian gave a presentation to Dimon and 200 other executives at the bank’s annual senior leadership conference in Miami, according to people familiar with the matter.

The firm is preparing to release a suite of products this year and recently rolled out its inaugural piece of software to a small group of customers, these people said.

Elanjian, who joined JPMorgan from arch-rival Goldman Sachs in 2018, hopes to bring several hundred companies and hundreds of investors onto the platform before its official launch later this year, according to the people.

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