JAMIE DIMON VS. THE INTERNET: J.P. Morgan CEO Jamie Dimon lit the Internet on fire yesterday after his remarks about how Bitcoin is “a fraud” and how he would fire any employee trading bitcoin for being “stupid.”
At a CNBC/Institutional Investor Delivering Alpha conference, Dimon argued that governments will eventually crack down on digital currencies because cryptocurrency is being used for illicit purposes. This is not the first time he’s gone on a tirade about cryptocurrency. In 2015, Dimon attended Fortune’s Global Forum conference where he told attendees, “You’re wasting your time” with Bitcoin.
This is only interesting (and perplexing) because:
• Dimon’s company was one of 86 corporate firms to play a role in forming The Enterprise Ethereum Alliance, an open-source blockchain initiative. The idea of the EEA is for big banks and tech companies to come together and build business-ready versions of the software behind Ethereum, a decentralized computing network based on digital currency.
• At yesterday’s conference, Dimon was careful to distinguish between cryptocurrencies and the blockchain because, well, J.P. Morgan has actually built its own blockchain on top of Ethereum.
• Remember when J.P. Morgan tried to patent a Bitcoin-style payment system? Although the patent was reportedly rejected, it’s fascinating to see the bank lay out some of the problems with the existing payment structure. For instance, “Furthermore, to date, there is no efficient way for consumers to make payments to other consumers using the Internet. All traditional forms of person-to-person exchange include the physical exchange of cash or checks rather than a real-time digital exchange of value. In addition, the high cost of retail wire transfers (i.e., Western Union) is cost prohibitive to a significant portion of society.” In 2014, Dimon told CNBC that Bitcoin is “a terrible store of value. It could be replicated over and over.” Unfortunately for J.P. Morgan, it didn’t quite work out.
• My favorite twist to all of this is that while Dimon was bashing Bitcoin, J.P. Morgan’s Chief Economist Michael Vaknin was hosting panelists from Blockchain Capital, Pantera Capital, Boost VC, and Polychain Capital. Not awkward AT ALL. J.P. Morgan’s own blockchain program lead tweeted a ¯\_(ツ)_/¯ in response to Dimon’s comments. And JPM’s former global trading macro head offered the less politically-correct, “Jamie, you’re a great boss and the GOAT bank CEO. You’re not a trader or tech entrepreneur. Please, STFU about trading $BTC.”
Taking the drama up another notch, Social Capital CEO Chamath Palihapitiya spoke at the same conference and immediately refuted Dimon’s earlier remarks. He said “the genie is fundamentally out of the bottle,” adding that he’s been “massively long Bitcoin” since 2012-13.
To wrap this up, I’ll leave you with a few thoughts. I do think Bitcoin and other cryptocurrencies have the potential to fundamentally reshape global finance. And unfortunately, many will undoubtedly get burned along the way as a result of entrepreneurs/investors who abuse the lack of regulations around ICOs. As Peter Smith, the CEO of Blockchain, said at Fortune’s Brainstorm Tech conference in July, “We’re cautious about it in the short term. But you have to temper that with the idea that every new technology is going to be like that in the beginning.”
UNICORN ALERT: Rubicon Global, the “Uber for trash,” just joined the unicorn club. The Atlanta-based startup received $50 million in a strategic investment from Mexican private equity firm Promecap, valuing the company at $1 billion. After Forbes published the story, I called CEO Nate Morris to better understand the fundraise. Here’s what I learned:
• Although this Form D states the company has $19.4 million in committed capital, Morris told me the company is actually raising $100 million in two $50M tranches, with the first round closed.
• The additional $50M will come from strategic investors at a higher valuation. It’s expected to close in late October or early November.
• I asked about how close the company is to profitability and Morris told me, “This will be the last round of capital we raise until we take the next step as a company.”
• Morris declined to say whether the company is considering an IPO in the near future, but he said he wants to “build a company in a way that has the option to IPO.” Hm.
This is an interesting company to keep an eye on …. I’ll have more on this tomorrow.
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• Happy Returns, a Los Angeles-based provider of a nationwide network of in-person return for points commerce and retail companies, raised $4 million in Series A funding. Upfront Ventures led the round, and was joined by investors including Lowercase Capital and Brian Spaly.
• Cybrary, a Greenbelt, Md.-based cybersecurity training course provider, raised $3.5 million in Series A funding. Arthur Ventures led the round.
• Camera IQ, a Santa Monica, Calif.-based camera experience manager, raised $2.3 million in seed funding. Shasta Ventures led the round, and was joined by investors including Presence Capital, Greycroft Tracker Fund, Brilliant Ventures and Act One.
• Moteefe, a London-based social commerce platform, raised $2.2 million in seed funding. Investors include Charles Songhurst, Livingbridge, Force Over Mass Capital, Fuel Ventures and Ascension Ventures.
• Machfu, a Germantown, Md.-based IoT startup, raised $1.6 million in funding. Blu Venture Investors led the round.
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HEALTH AND LIFE SCIENCES DEALS
• Rani Therapeutics, a San Jose, Calif.-based company that helps convert injectable drugs into pills, raised $39 million in Series D funding. Investors include GV.
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PRIVATE EQUITY DEALS
• Howard Midstream Energy Partners, a San Antonio, Texas-based natural gas company, said it plans raise $200 million. In 2016, the company posted revenue of $124.9 million and loss of $3.9 million. Barclays, RBC Capital, Tudor, Pickering, Holt & Co., BofA Merrill Lynch, Citigroup, MUFG, SunTrust Robinson Humphrey, and Wells Fargo Securities are book-running managers in the deal. The company plans to list on the NYSE as “HMP.”
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FIRMS + FUNDS
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• Thrive Capital hired Ryan Pripstein, Ryley Reynolds, and Gaurav Ahuja as investors.
• Liesl Sitton joined BayBoston Managers as a managing partner. Previously, Sitton was at Boston Consulting Group.
• Kinzie Capital Partners named Michael Sullivan an associate and Katie Li as a senior analyst of finance and operations.