Code Advisors is getting a $25 million investment from financial services giant JPMorgan Chase for a minority stake in the Silicon Valley-based boutique investment bank and advisory firm.
The influx of cash will allow Code to grow quicker, said Quincy Smith, one of the firm’s founders, which also include Michael Marquez and Fred Davis.
The non-exclusive deal, the two firms said, is the natural extension of a longer-term relationship that has been developing for a while.
“To the extent that the money means we are getting even closer together, that’s great,” said Smith in an interview earlier today. “This solidifies a partnership that has existed for some time.”
Plus, it presumably also gives each what the other cannot offer clients. Usually a big bank might try to kill or buy a firm like Code, so this move is unique.
“We are growing our business and getting access to next-generation entrepreneurs that Code knows well,” added Kurt Simon, co-head of Technology, Media and Telecom Banking at J.P. Morgan. “And it’s a sign of continued investment in our important West Coast businesses.”
Indeed, J.P. Morgan has been competing with Goldman Sachs and Morgan Stanley for a higher profile in Silicon Valley. It recently was selected with the pair as one of the lead bankers in the upcoming Facebook IPO. It has also worked recently with LinkedIn, Skype and Pandora.
Code has taken on smaller deals with a range of hot start-ups and entrepreneurs, which was one of the attractions for J.P. Morgan. That includes representing Spotify and LivingSocial, and making investments in Path and Flipboard.
“For J.P. Morgan, it’s like making an limited partner investment in another venture firm,” said Smith. “And for us, we can offer a lot more services to our clients as they grow.”
As part of the deal, Jes Staley, CEO of J.P. Morgan’s investment bank and a member of the firm’s operating committee, will become a non-voting observer on Code’s board.
Here’s the full press release on the deal:
CODE ADVISORS ANNOUNCES A $25 MILLION INVESTMENT FROM JPMORGAN CHASE
San Francisco May 3, 2012 — Code Advisors announced today that JPMorgan Chase (NYSE: JPM) has agreed to make a $25 million minority investment. Jes Staley, CEO of J.P. Morgan’s Investment Bank and a member of the firm’s Operating Committee, will also act as a non-voting observer at Code’s Advisory and Investor Board meetings.
“We are thrilled that JPMorgan Chase has decided to invest in Code Advisors,” said co-founder Quincy Smith. “This transaction demonstrates how together we might energetically adjust to serve the new needs of entrepreneurs and companies. The chance to work more closely with Jes and his team gives us awesome global and experienced perspective.”
J.P. Morgan’s investment and relationship will allow Code to accelerate its growth opportunities and allow each team to offer complementary services to their respective and shared clients.
“Identifying and supporting great ideas early in their development is particularly important in the technology space,” said Staley. “Code continues to uniquely identify next generation companies, and together we are excited to help those entrepreneurs grow and expand their businesses.”