By Justin Baer And Sarah Krouse
Symphony Communication Services LLC, the instant-messaging
software company backed by many of Wall Street's biggest firms, is
seeking another investment round that may value the startup at as
much as $1 billion, people familiar with the matter said.
The Palo Alto, Calif., company is canvassing a range of
potential new investors, including venture-capital funds and
additional financial firms that weren't among the 14 that took a
stake in Symphony last year, the people said. Symphony also is
seeking additional funds from its existing backers, which include
Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase &
Co. and BlackRock Inc., the people said.
Those 14 firms invested $66 million in Symphony, which in turn
bought Perzo Inc., then a two-year-old startup founded by veteran
communications executive David Gurle. Goldman, which had led the
consortium, contributed its in-house messaging developments to the
new venture.
Wall Street has rallied around Symphony because of the startup's
potential as a future alternative to Bloomberg LP's terminals, a
ubiquitous--and expensive--presence on most big banks' and money
managers' trading floors. Among the Bloomberg terminal's numerous
functions, its instant-messaging platform has proved to be one of
the most popular for many traders and salespeople.
Symphony also has made its encryption technology a key selling
point for financial firms wary of their sensitive data falling into
the wrong hands.
Bank regulators have taken notice. Last week, New York's
Department of Financial Services sent Symphony a letter asking
about some of its features, including data encryption and deletion.
Banks have paid billions of dollars in financial penalties in
recent years to resolve allegations of market manipulation. In
those cases, investigators relied heavily on communications records
such as chats between traders and other bank employees.
In his letter to Symphony, acting Department of Financial
Services Superintendent Anthony Albanese noted that banks had an
obligation under New York state law to retain their records.
A Symphony spokeswoman said the company's features were built to
enable their customers to meet their regulatory requirements.
Symphony's messaging platform is set to debut to U.S. customers in
August, with the service available globally in September.
A deal on the new funding isn't imminent. And while some
investors have expressed interest in backing Symphony at the $1
billion valuation, the company could fall short given the
still-early stage of its development, people familiar with the
matter said. A Symphony spokeswoman declined to comment on the
fundraising efforts.
Bank of America Corp., Bank of New York Mellon Corp., Citadel
LLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG,
Jefferies LLC, Maverick Capital Ltd., Nomura Holdings Inc. and
Wells Fargo & Co. had also invested in Symphony last year.
U.S. financial-technology companies drew nearly $10 billion in
investments last year, up from $3.4 billion in 2013, according to
research by Accenture and economic development group The
Partnership Fund for New York City.
Write to Justin Baer at justin.baer@wsj.com and Sarah Krouse at
skrouse@efinancialnews.com
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