Robot factories and hypersonic missiles draw JPMorgan investment
JPMorgan Chase says it invested $5 billion in startups during the first year of its U.S. security and resiliency initiative, reaching halfway to its initial…
For U.S. industries, strengthening domestic manufacturing and supply chains is a growing priority. JPMorgan Chase says its robot factories hypersonic missiles investments reached $5 billion in the first year of a security and resiliency initiative, halfway to its initial goal.
The bank has taken stakes in Hadrian, which builds automated factories for aerospace and defense firms, and Castelion, a startup developing low-cost hypersonic missiles. Co-President Doug Petno told CNBC the bank may exceed the $10 billion investment target it announced last year.
JPMorgan also financed and facilitated more than $230 billion in transactions tied to the initiative during its first year. That work sits within a broader goal of supporting $1.5 trillion in activity over a decade, according to the bank.
The investments mark a shift for a lender that had moved away from taking stakes in startups. JPMorgan said the $5 billion deployment came faster than expected, as it found opportunities in emerging defense, manufacturing and supply-chain companies.
Factories and missiles in the portfolio
Hadrian builds automated factories that make parts for the defense, aerospace and maritime sectors. In August, JPMorgan helped lead a $1.4 billion funding round for the company. A California factory operated by Hadrian has 10 robots for every human employee, according to the startup’s founder.
Castelion was also involved in a major funding round that month: JPMorgan took part in a $1 billion round for the company. Its flagship product is Blackbeard, described in the source as a relatively low-cost hypersonic missile. Castelion was founded in late 2022 by a group of former SpaceX engineers.
Most of JPMorgan’s startup investments have not been disclosed. The known stakes, however, show how the initiative is directing capital toward companies working on manufacturing capacity and defense-related technology.
“Our approach is to find generational companies and partner with them for the long term,” Todd Combs, who leads the JPMorgan group responsible for startup investments, said in a statement Monday.
Combs, a former Berkshire Hathaway executive and former JPMorgan board member, reports directly to CEO Jamie Dimon. Petno said Combs had “hit the ground running,” adding: “He's done a great job and put us in some really interesting companies.”
Why JPMorgan is making direct bets
Dimon created the initiative a year ago amid concerns about threats to the flow of energy and key components needed by U.S. industries and defense. The bank pointed to wars in Ukraine and the Middle East, as well as trade disputes with China, as factors behind those concerns.
The program reaches beyond defense, manufacturing and supply chains. JPMorgan says its scope also includes frontier technologies, pharmaceuticals and health technology. Petno said companies had been working to address these challenges and build capabilities in the United States rather than rely on overseas trading partners.
“There's a lot of really interesting companies that have been working to solve some of these problems,” Petno told CNBC. He described the businesses as early-stage advanced manufacturers developing domestic capabilities.
Direct startup stakes differ from JPMorgan’s more familiar role as a lender and adviser. The bank had previously pulled back from startup investments, which can involve relatively risky bets on unproven technologies, and spun off its private-equity business, One Equity Partners, more than a decade ago.
Petno said JPMorgan could expand the initial $10 billion target. Combs said in a statement Monday that putting more than $5 billion to work in the first year showed the number of businesses seeking to strengthen critical supply chains.
Source: cnbc.com
