First it was Goldman. Then Morgan Stanley. And now JPMorgan Chase is the latest investment firm to double down on Internet and digital-media companies in another sign that the Wall Street wants in on Silicon Valley’s optimism and “are willing to pour in money at gravity-defying valuations” to get it. JPMorgan’s asset-management unit plans to start raising between $500 million and $750 million to start a fund. Marketing materials went out to wealthy investors a couple weeks ago, but it’s still not clear whether the firm plans to use those millions to invest directly in companies, or buy and sell shares on behalf of clients à la Goldman’s Facebook deal — the one they banned from the U.S. for regulatory concerns. The Wall Street Journal says the fun will target “late-stage” private companies, which means Facebook, Groupon, Twitter, and other expected cash cows of bubble 2.0 that have yet go public/show the world their balance sheet.
To get some idea of the kind of potential windfall that makes Wall Street eager to invest even at inflated valuations, consider Zynga. The developer, which is also still private, behind popular games like FarmVille and CityVille, is rumored to be searching for $250 million in financing. The company, which is already profitable and has cash in the bank, doesn’t need the money. But sources say if it raises money now, it would be under the assumption that it’s worth $7 billion. Last April, it was valued at $4 billion. You know, “bubble” might not be the right word for it. It’s more like one of the those wind chambers from a game show where money’s flying in the air and contestants trample over each other to grab as much as they can while it’s still floating.
J.P. Morgan Plans New-Media Fund [WSJ]
Zynga’s Talks With Investors Value Gaming Concern at Over $7 Billion [WSJ]