JPMorgan is planning on starting a fund of between $500 million and $750 million to invest in internet and digital media companies, according to a news report.
The Wall Street Journal reports that marketing materials were sent to prospective investors about two weeks ago.
The idea is to place bets on companies with established business models, such as Facebook, Zynga and Groupon, and steady revenue before they go public in widely anticipated stock sales.
JPMorgan plans to buy and sell shares in these companies on behalf of clients, and will not directly invest the firm’s own money, one of these people said.
But simply having a ready base of retail investors could give JPMorgan’s investment bank a competitive edge in winning business from the fledgling technology firms.
The reported move comes as interest in social networking sites is increasing.
The JPMorgan fund follows Goldman Sachs’s own big step into social media: a $1.5bn round of financing for Facebook, which valued the social networking giant at $50bn.
Goldman and Digital Sky Technologies, a Russian investment firm, invested $500m of their own money in Facebook.
Goldman also raised $1bn from wealthy investors to invest in Facebook, though the firm chose to limit that fund to individuals outside the US amid worries that the investment pool might run afoul of American securities laws.
