JPMorgan creates unit backing quest for the next Airbnb
JPMorgan Chase, the largest U.S. lender, is setting up a unit that will support venture capital firms backing startups with the potential to become the next Airbnb, Facebook or Google.
The group will be housed in the New York-based company's commercial banking division and marks a major step forward in the expansion of services for the so-called innovation economy and the startups and investors propelling it.
In the U.S., Uber and Lyft led unicorns -- startups valued at $1 billion or more -- worth a combined $215 billion that began trading in public stock markets this year, according to Silicon Valley Bank, a 36-year-old lender specializing in the market. Venture capital firms have invested $82.6 billion in startups so far this year, compared with $77.8 billion at the same point in 2018, according to CB Insights.
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"We’re intentionally and strategically building a dedicated ecosystem around the innovation economy that goes beyond traditional banking,” Melissa Smith, head of specialized industries in the lender's middle-market banking business, said in a statement. "The new venture capital coverage team is a tremendous addition to JPMorgan’s arsenal of capabilities.”
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To lead the venture capital unit, JPMorgan hired four executives from Silicon Valley Bank, which has supported tens of thousands of startups. Pamela Aldsworth will serve as managing director, responsible for driving JPMorgan's venture capital coverage and building relationships with key firms, the lender said. She will be joined by Andy Kelly, Katie Taormino and Dave Reich.
“It’s not often that an opportunity to build something of this scale comes along, and I’m excited to be joining JPMorgan as the bank accelerates on its commitment to this sector,” Aldsworth said in the statement. “Venture capital is the lifeblood of the innovation economy.”
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By the end of September, 180 startups in the U.S. were valued at $1 billion or more, according to CB Insights. Juul Labs, the maker of flavored vaping products, had garnered $13.6 billion in funding, while home-sharing app Airbnb -- which plans to go public next year -- amassed $3.6 billion and Elon Musk's SpaceX had $2.9 billion.
New companies haven't had a trouble-free ride, though.
WeWork, the office-sharing firm, pulled an initial stock offering in late September after scrutiny of its finances, and co-founder and CEO Adam Neumann stepped down. Juul is grappling with backlash after a rash of illnesses and deaths among e-cigarette users, and both Uber and Lyft are trading well below their introductory valuations.