JPMorgan Chase is preparing to go all-in on private companies.
For the past year, the bank has been quietly hiring programmers and creating products for a new fintech business that aims to provide an array of services to start-ups and investors around the world, according to people with knowledge of the matter.
The business, known internally by the code name “Project Bloom” because of its goal of helping early-stage private firms grow, is run by Michael Elanjian, head of digital private markets, said the people, who declined to be identified speaking before its launch.
JPMorgan, the biggest U.S. bank by assets, raised eyebrows last month when it said that expenses would surge this year, in part because of an annual technology budget that has grown to at least $12 billion. CEO Jamie Dimon is aggressively investing to help his bank battle fintech firms, and executives see an opportunity to create a private-markets winner before start-ups can dominate the space.
A key part of Project Bloom is a digital network for JPMorgan clients that will match start-ups with investors, helping them in fundraising rounds, said the people. Other planned-for services include helping companies sell shares in tender offers or providing loans on private stakes, offering a digital interface for secondary trading of private company stock, and helping venture capital firms raise new funds.
While elements of these offerings exist across parts of JPMorgan’s sprawling operations, the new effort aims to create a one-stop digital portal for start-ups and venture capital firms, family offices and other institutional investors, said the people.
The business aims to tie in offerings from the firm’s corporate and investment bank, commercial bank and private bank. For instance, the private markets trading desk first reported by CNBC in 2020 will feed into the new platform, according to the sources.
By creating a self-service platform, JPMorgan can target smaller, earlier-stage companies than its bankers traditionally engage with, 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 explode. Investors are funneling billions of dollars into the asset class in the hopes of catching companies before they mature and their growth prospects level off, and start-ups are staying private for far longer because of the near-limitless 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 lifted the fortunes of start-ups like Carta, Brex and Forge that cater to private companies in one way or another. Banks have historically geared their services to public companies and more established start-ups that are approaching public listings, leading to the rise of specialty providers.
Now, JPMorgan appears to be betting that if it can create a fully-scaled private company network before the fintechs do, its place in a future in which private companies have even greater importance will be assured.
Stealth mode
The new JPMorgan business has grown to 80 or so employees operating in stealth mode, walled off from other JPMorgan employees in more than a half dozen cities around the world, including in New York and New Jersey; Plano, Texas; Chicago; Glasgow; London and Buenos Aires, said the people.
The bank is in the midst of a hiring spree, pushing for 200 employees for the private markets business by year-end and specifically looking for software engineers, data wranglers and artificial intelligence specialists, according to job listings.
“We are building a high-profile and exciting new data-driven fintech business for the firm, with the goal of creating a market leading platform for private markets,” the bank said in one job post. The team “building the product brings together data scientists, finance specialists, former entrepreneurs, product managers, designers, and engineers, who work together with the benefits of a startup culture that can leverage the scale of JPM.”
Another job post, this one for a business development manager, said the bank was looking for “individuals with entrepreneurial experience” like founders and investors to help it acquire clients for the business, referred to as Digital Private Markets.
In response to queries, JPMorgan spokeswoman Jessica Francisco had this response: “We’ve been a leader in private capital markets for years, and we see opportunity to provide new digital capabilities to private companies and investors.”
Word about the project began circulating within JPMorgan and at 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.
The firm is gearing up to release a suite of products this year and recently launched its inaugural piece of software to a small group of clients, these people said.
Elanjian, who joined JPMorgan from archrival Goldman Sachs in 2018, hopes to sign several hundred companies and hundreds of investors onto the platform before its official launch later this year, according to the people.