JPMorgan Chase has made its first $5 billion of direct investments in defense-related startups, a notable departure from its traditional role as a lender and advisor. The bank had previously moved away from taking startup stakes, which it viewed as relatively risky bets on unproven technology, and spun off its private equity business, One Equity Partners, more than a decade ago.
The new investments sit inside a larger security and resiliency project that aims to direct $1.5 trillion over 10 years toward industries supporting American national interests. So far, the bank has financed and facilitated more than $230 billion in that effort, which is led by Jay Horine, a former co-head of investment banking.
To support the initiative, JPMorgan has built a team of about three dozen bankers, aided by hundreds more across the firm, and expanded the effort to Europe and Canada. The bankers are mapping distribution lines for key products such as submarines, missiles, and aircraft to identify suppliers that may lack capital or capacity to meet rising demand. The bank also stays in regular communication with the U.S. Department of Defense and Department of Commerce about government needs, according to Petno, the executive quoted in the report.