JPMorgan Chase’s fintech buying round

This week I reported on JPMorgan Chase, which has been on a deal spree, acquiring or investing in more than 80 companies since 2021. The main reason? Competition. Jamie Dimon, JPMorgan Chase’s billionaire chairman and CEO, has long warned about the competitive threat posed by fintechs and Big Tech. Companies like Amazon or Google or PayPal are not constrained by legacy software, or the amount of regulation that banks have to deal with and are free to innovate.

Dimon’s response to this threat is to invest. JPMorgan Chase is so massive — the bank had $2.38 trillion in deposits at the end of the first quarter — that it has deep pockets to invest in adjacent businesses like British digital fortune Nutmeg Savings and Investments; or 75% of Volkswagen payments; or Frank, the financial aid website. The agreements are seen as a way of gaining access to new customer bases that the main bank wants access to. The latest deal — Frank — has caused some trouble for JPMorgan Chase, which is now embroiled in a very public lawsuit against Charlie Javice, the 31-year-old founder of Frank (you can catch up on that story here ). Regulators, namely the Office of the Comptroller of the Currency, are now scrutinizing JPMorgan Chase’s due diligence of recent deals, Financial Times reported April 7. It’s unclear what the OCC is looking at, but JPMorgan’s purchase of Frank is likely to be at the top of the list. (The OCC planned the audit before JPMorgan’s lawsuit against Javice, the story said.) The bank conducted weeks of due diligence on Frank, but was unable to determine exactly how many customers the startup had before buying it in September 2021 for $175 million. JPMorgan Chase and the OCC declined to comment.

But Frank was just one of many deals JPMorgan Chase has made since 2021. Most of the bank’s transactions were investments, where it bought a minority stake in a company or participated in a financing round. Surprisingly, only 16% of these were acquisitions. Many of the deals were so small that they had no valuation. Some were outside banking or fintech. It’s The Infatuation, the restaurant review site JPMorgan Chase bought in 2021, or retailer Simply Organic Beauty, in which JPMorgan Chase partnered with West Lane Capital Partners to buy a majority stake.

A trend emerged from the data: JPMorgan Chase is a major investor in fintech. Since early 2021, the bank has invested in or bought more than 40 fintechs.

JPMorgan’s game plan is “spread [its] are betting on hopefully acquiring the next big technology or service that ends up giving them a head start, says Stephen Biggar, analyst at Argus Research.

You can read more about the bank’s purchase round – and what it now owns – here.

Luisa Beltran
Twitter: @LuisaRBeltran
Email: [email protected]

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Jackson Fordyce curated the offer section in today’s newsletter.

VENTURE OFFER

– Lime busan Addis Ababa, Ethiopia-based data engine provider for commerce businesses, raised $83 million in Series B funding led by PELLIAUN and House of leaves.

– Landslide energya Seattle-based fusion energy company, raised $40 million in Series A funding. Lower carbon capital led the round and was joined by Founders Fund and Toyota Ventures.

– Katmaia New York-based virtual communications platform, raised $22 million in Series A funding led by Starr insurance companies.

– River Lanea Cambridge, UK-based quantum engineering company, raised £15 million ($18.72 million) in Series B funding. Molten Ventures led the round and was joined by Altair, Cambridge Innovation Capital, Amadeus Capital Partnersand National Security Strategic Investment Fund.

– Aradoa São Paulo-based platform that connects fruit and vegetable producers with restaurants and retailers, raised $12 million in funding. Acre Venture Partners led the round and was joined by Syngenta Group Ventures, Globo Ventures, Valor Capital, MAYA capitaland SP Ventures.

–YELO financinga New York-based college funding solutions platform, raised $1.2 million in pre-funding from Stéphane Conrad and other angels.

PRIVATE EQUITY

– Lafayette instrumentssupported by Branford Castle Partnersacquired Aurora Scientific, an Aurora, Canada-based instrument and software manufacturer in the life sciences sector. Financial terms were not disclosed.

OTHER

– FULLBEAUTY brands agreed to acquire ELOQUIIa Columbus, Ohio and New York-based plus-size fashion brand, from Walmart.

IPOS

– Kenvuethe Skillman, NJ-based consumer health business to Johnson & Johnsonplans to raise up to $3.48 billion through the sale of 151.2 million shares priced between $20-23.

SPAC

FUNDS + FUNDS OF FUND

– Ridge Venturesa San Francisco-based venture capital firm, raised $180 million for its fifth fund focused on investments in startup and early Series A software companies.

HUMAN BEINGS

– ICGa London-based alternative asset management firm, employed Tor Herno as managing director. Previously he was involved Black stone.

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