How Grasshopper uses team building and customer acquisition strategies to catalyze its growth

Acquiring talent with expertise in emerging technologies and bringing fresh perspectives is increasingly viewed as a vital investment for a company’s sustained growth, expansion, and progression.

Goldman Sachs, for instance, runs its summer internship program as a means to gauge the potential of its young recruits, with an eye toward offering full-time positions to promising candidates.

Grasshopper has recently grown its talent pool by bringing on four new executives to fill key roles in startup banking, embedded finance, product management, and SMB/SBA lending.

After its 2019 debut as a direct bank for tech startups, Grasshopper evolved and relaunched itself in 2022 with a wider service offering. It now caters to SMBs, startups, fintechs, venture capital and private equity funds, and commercial clients seeking SBA and real estate financing.

“We believe that it is important for Grasshopper to have a diverse balance sheet, while also staying committed to providing a great banking experience to client segments where we can make a difference,” said Chris Tremont, Chief Digital Officer at Grasshopper.

Tremont notes that moving beyond a niche-focused strategy is important because if a specific approach or execution falters, reaching desired growth targets can be more challenging than larger institutions catering to diverse client segments.

We look at how team building is intertwined with Grasshopper’s growth strategy and its growth trajectory two years post-relaunch.

The four key business lines of Grasshopper Bank

In his role, Tremont oversees teams across four major divisions within the bank, in addition to the bank’s Marketing & PR team:

1. The Direct Business line focuses on serving small and mid-sized businesses (SMBs) and startups. 

• SMBs: SMB acquisition and engagement efforts are all digital in nature. The bank uses data analytics and marketing in areas like online affiliate partnerships, search engine marketing, social media, and content creation to promote both its business banking and SBA lending capabilities.
• Startups: “Our strategy to bank startups combines those digital efforts with more traditional in-person networking and support of the venture ecosystem,” notes Tremont. This includes boosting brand visibility through referral partners like fractional CFOs, sponsoring accelerator programs, and engaging with VC fund clients to support their portfolio companies.

2. The Embedded Finance Business line offers fintech companies access to the bank’s services through its API technology. “We primarily support depository and payments/card programs and look to work with companies where we have strong strategic and cultural alignment,” said Tremont.

3. The Product Team is responsible for driving the digital product experience across all business lines at the bank.

4. The Strategic Investments area invests in fintech companies that either contribute to the bank’s technology stack or integrate with its embedded finance platform.

How expanding the talent pool fit within Grasshopper’s growth strategy

Tremont outlines three primary objectives for the new hires joining the digital banking team:

1. Expand the deposit portfolio by targeting SMBs, startups, and fintech clients to achieve profitable growth.
2. Enhance visibility and access to the bank’s SBA 7a loan program, making it easier for small businesses to explore credit options.
3. Advance the digital banking platform and product offerings for business and venture clients, including new features such as digital account openings for VC/PE funds, FedNow real-time payments, and expanded marketplace options for startups.

So, how do these goals fit into the bank’s broader growth strategy?

Tremont notes that the new team members will work within cross-functional (xF) teams that integrate various departments such as sales, operations, product, client services, and fraud prevention. These teams focus on serving specific client segments like SMBs, fintechs, and VCs and work together with shared annual goals. By fostering collaboration across departments and maintaining internal communication, these xF teams can break down traditional silos, speed up decision-making, and deliver better experiences for clients.

“When we bring on new hires, whether they join the digital banking team or another business line, all have a chance to be a part of one or multiple xF teams,” notes Tremont. “This allows new hires to be able to operate entrepreneurially and to be able to have a dual role of both setting or influencing strategy and also being able to execute said strategy tactically.”

Grasshopper’s current growth stage

Grasshopper Bank launched in 2019 and broadened its vision to serve a wider clientele starting in 2021. This expansion involved bringing in a new management team, launching new business lines, and overhauling the technology stack, with these updates taking place between mid-2021 and mid-2022, according to Tremont.

“Once we moved through that rebuilding phase, we entered a period of getting these new business lines, like serving SMBs and fintechs, live,” he said.

In its first year and a half following these initiatives, Tremont said the bank experienced notable growth, with deposits soaring from $0 to approximately $1 billion and onboarding around 1,000 new SMB clients monthly to its digital platform. 

Tremont maintains that the bank is still in its growth phase — a perspective he plans to keep. He believes the bank is only scratching the surface of its market potential, though he also acknowledges that a few years of operation have added a layer of maturity to its business model.

“I think this even shows up in the recent hires we made that were attracted to the company – fintech founders, startup consultants, non-bankers,” he notes.

To propel its growth, the bank is applying targeted strategies for customer acquisition:

For SMB clients: Grasshopper employs a comprehensive digital marketing strategy to attract potential SMB clients. This includes featuring their business deposit products on platforms like NerdWallet and Business Insider, using Google search engine marketing, partnering with LLC incorporation firms, and publishing content on their blog and social media channels.

For startup clients: For attracting startups, the bank uses a different approach. The bank’s team attends and hosts events, maintains close relationships with VC firms that introduce them to portfolio companies, and builds referral networks with active players in the startup community, such as fractional CFOs.

For fintech clients: When it comes to acquiring fintech clients for its Embedded Finance platform, Grasshopper relies on its reputation in the industry. According to Tremont, the bank receives significant inbound interest and also leverages its networks, participates in conferences and podcasts, and utilizes referrals from technology partners and its Board.

Although the firm aims to strengthen these internal strategies, executing them as a digital bank presents its own set of opportunities and challenges.

Upsides of running a digital bank

According to Tremont, launching a digital business bank with a lean team and a flat organizational structure offers several advantages:

• Close alignment between the workforce and clients’ needs: This allows the bank to quickly adapt and refine its products and services based on direct feedback.
• Deep expertise in serving specific client segments: That knowledge “goes a long way when serving as a trusted banking partner for technology companies”.
• Avoid conflicts in client service and benefit from scalable platforms: This enables the firm to offer competitive pricing on its products.

Challenges along the way

Tremont wasn’t part of Grasshopper’s original launch in 2019, but he was involved in the bank’s relaunch with a renewed direction. Reflecting on the process, he shared that, as with any startup, building a bank from the ground up requires: a clear mission, a passionate team working toward that mission, and strong execution of a strategic plan.

“These were all things the team had to do over the last few years, and with that comes opportunities and challenges along the way,” said Tremont. Some challenges included key considerations such as the need to work closely with tech partners to overhaul systems and introduce new offerings like digital account opening and the API platform, which took longer than initially anticipated.

Grasshopper placed significant emphasis on meeting regulatory expectations during its relaunch, investing ample time in the process. Consistent communication with regulators, though challenging, was essential for managing these relationships safely and effectively over the long term.

“Our team has been involved in embedded finance since 2013, so we have a good understanding of both the risks and rewards of the business,” Tremont explained.

Despite recent economic uncertainties and a surge in competition within the business banking market, Tremont believes Grasshopper has anchored itself after its early wins. He noted that although challenges are ongoing, they also offer avenues for growth and innovation as the bank moves forward.