Finance

JPMorgan is forming a new VC coverage group in its commercial bank and hired four exes away from Silicon Valley Bank to lead it

  • JPMorgan has formed a VC-focused coverage group that will be housed in its commercial bank, and has hired four people away from Silicon Valley Bank (SVB) to lead it. 
  • The new venture capital-focused team will be lead by Pamela Aldsworth, who previously was head of VC relationship management at SVB. Some 50% of all venture capital-backed tech and life science companies in the US bank with SVB, according to its website.
  • The new team with work with JPMorgan middle-market tech, life science, and digital retail bankers that cover VC portfolio companies. 
  • The coverage group will also work closely with people in JPMorgan’s investment banking, private banking, and asset management arms. 
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JPMorgan is looking to up its game in the startup space with a new VC-focused relationship management team led by Silicon Valley Bank alumni.

The coverage group will be headed up by Pamela Aldsworth, formerly a managing director and head of VC relationship management at SVB, JPMorgan said in a statement on Tuesday. Aldsworth will join JPMorgan as a managing director based out of Boston and will report to Melissa Smith, who heads up specialized industries for middle market-banking. 

The VC team will be part of the JPMorgan’s commercial bank, which provides small to mid-sized companies with credit, financing, treasury and payments, international banking, and other services, and will sit in its middle market banking & specialized industries group, which has people installed in 50 US metro areas. 

The new group will work with the middle-market bankers who cover VC firm’s portfolio investments, and also with people across JPMorgan’s investment banking, private banking, and asset management divisions — showing how the bank is taking another step to have different areas team up to drive business.  

Under Aldsworth, the new team will manage relationships with VC players. SVB alums Andy Kelly and Katie Taormino will also join the group, according to the statement, and will be based in the San Francisco Bay Area. Kelly and Taormino were both managing directors at SVB, where they were responsible for venture capital relationship management.

JPMorgan in March had announced it formed a new industry group in its middle-market banking business by melding its existing tech and emerging growth teams. The combined group is aimed fast-growing, early-stage companies in areas including software, food, and wellness. The co-heads of what the bank dubbed the technology and disruptive commerce group also report to Smith. 

 The bank has been looking to drive more deal business for its regional investment bankers based in hubs around the country, who work closely with the commercial bankers that interact with clients on a more day-to-day basis. Meanwhile, Bank of America and Goldman Sachs have also been putting a focus on smaller deals to help juice investment banking revenue. 

JPMorgan’s investment bank has also been pushing to nab more high-profile business in taking hot internet startups public and doing more lending from its private bank to ultra-rich people including Silicon Valley entrepreneurs in order to deepen those relationships — a push aimed at chipping away at Goldman Sachs’ and Morgan Stanley that nabbed it a spot on some key deals but also landed it in a lead position on the failed WeWork IPO. 

As part of the new group, JPMorgan has also hired SVB’s Dave Reich to head up credit initiatives for what it calls “innovation economy” companies, and he’ll be based in Boston. Reich was previously head of debt and portfolio management at SVB. 

SVB provides small-business banking as well as venture capital and debt to startups. Some 50% of all venture capital-backed tech and life science companies in the US bank with SVB, according to its website.

According to JPMorgan’s 2018 Letter to Shareholders, 39% of the bank’s total North American investment banking fees came from commercial banking clients, which accounted for $2.5 billion in revenue. That figure has risen from $1 billion 10 years ago, and the letter identified it as a key focus for growth. JPMorgan Chief Executive Jamie Dimon said in the shareholder letter that he expected that revenue number to continue to revenue. 

The commercial banking division at JPMorgan reported third-quarter profit that was down 14% year-over-year thanks to lower net interest income, though gross investment banking revenue for the unit was higher due to better equity underwriting and M&A activity. 

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