‘We aim to meet entrepreneurs where they are in their journeys’: J.P. Morgan’s Ashraf Hebela on how JPM is sharpening its focus on startup banking

Today, we’re diving into the ever-green landscape of startups and startup banking. While the startup scene is always buzzing, recent years have been particularly challenging due to a tough market, limited investment opportunities, and waning investor confidence. However, with a rebound in VC funding this year and recent rate cuts by the Fed, there’s a glimmer of hope for improvement and new opportunities.

Joining me to discuss startup banking and share related insights from recent J.P. Morgan research is Ashraf Hebela, J.P. Morgan’s Head of Startup Banking and Co-Head of Technology Banking. In our conversation, Ashraf delves into how J.P. Morgan is sharpening its focus on startup banking, what approaches can better serve underrepresented founders, and the critical support that banking startups require from their financial institutions to thrive.

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The 5 key takeaways

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1. How does startup banking complement J.P. Morgan’s strategy? Ashraf underscores the role of technology in advancing the innovation economy and driving growth. He explains that J.P. Morgan has been deeply engaged in the startup and innovation space for nearly a decade, ensuring that innovators, both nationally and internationally, have the banking services necessary to achieve their goals.

“Our job is to make sure that the best innovators, both nationally and globally, can achieve their outcomes by providing them with world-class banking services across the board,” says Ashraf.

J.P. Morgan’s platform featuring a comprehensive range of financial services — including commercial, private, and investment banking — aims to support entrepreneurs at all stages of their ventures. Ashraf notes that the bank’s goal is to support entrepreneurs from their initial concepts to their final achievements, providing them with advice, insights, and networking opportunities to foster their success.

2. Cultivating startup banking and community bank-like ties with new entrepreneurs: Ashraf believes that to maximize the chances of achieving successful outcomes, it is essential to support entrepreneurs from the outset. This means being there when entrepreneurs are considering effective networking strategies, learning about banking products and services, and in need of guidance. The journey largely revolves around empowering entrepreneurs and enhancing their likelihood of success.

“We aim to meet them where they are — whether that means engaging with them early on or in different regions beyond just California and New York,” notes Ashraf. “As a national business, we believe in meeting with entrepreneurs both in their physical spaces and at the specific timeline of their journey.”

The bank is creating value through networking, insights, connections, events, and sponsorships that foster a sense of community within the innovation economy, according to Ashraf. This, combined with JPM’s comprehensive suite of banking products, helps the bank align with new entrepreneurs’ needs.

“We do the gamut inside of the commercial bank, and then help them [entrepreneurs] realize their dreams and hopes in the public markets,” notes Ashraf.

3. Improving support for women entrepreneurs and founders of color: The startup landscape frequently sees the underrepresentation of women and founders of color. According to JPM’s research, only 7% of unicorn founders are women, and the number of firms led by people of color or minorities is likely even lower.

What can be done differently to improve investment opportunities for this segment and address their banking needs?

“It starts with the investment in a broad national startup banking business,” says Ashraf. “Most of the underrepresented minorities as entrepreneurs are sitting at the early stage, and that means having to invest in an early-stage business.”

Ashraf also highlights:

• The significance of having a presence in diverse locations. 
• Investing in a diverse workforce to facilitate this effort. 
• Catering to the various needs of entrepreneurs, which includes not only access to capital but also access to information, insights, and networking opportunities.

“As you invest in all of that nationally, you increase the probability of allowing more representations into the innovation economy,” he says.

4. Drivers of increased VC fintech funding and how startups can tap into the trend: Ashraf explains that the rise in fintech funding is a long-term trend, with significant investments starting a decade ago.

These investments cover various sub-sectors, resulting in improvements to the online banking experience. The rise of new card options and advancements in wealth technology have played a key role in this evolution. Ashraf specifically focuses on wealth tech.

“The transfer of wealth is now beginning and shifting from the older generation to the newer generations — from Baby Boomers over to the subsequent generations,” he notes. “That’s creating a lot of interesting startups in the wealth tech space.”

The demand for fast and accessible digital wealth management solutions by younger generations is increasing investments in wealth tech.

5. What do banking startups need from their banks to succeed? Ashraf outlines 3 core components that startups should seek from their banking partners to succeed:

• Safety, reliability, and stability, given the critical nature of financial services.

“To me, stability, safety, and reliability come almost before anything else,” says Ashraf.

• Access to capital, information, and networks to help entrepreneurs succeed.

“Somebody [FI] who understands you, who wants to grow with you, and who can grow with you,” plays a vital role in both present and future growth, according to Ashraf.

• A cohesive financial services experience, where a single institution can provide multiple services tailored to the entrepreneur’s needs.

“It just becomes difficult to build cohesion around your financial needs. So, I’d say that’s a really important part as well,” asserts Ashraf.

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Peruse the transcript (for TS PRO subscribers)

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Introduction of role

My name is Ashraf Hebela and I’m the head of startup banking at J.P. Morgan, and I’m the co-head of the technology banking team as well. I’ve been at J.P. Morgan now for almost two years; before that, I was at Silicon Valley Bank for 13 years. Before that, I spent almost half of my career in technology, in various roles in Silicon Valley, from programming to product management, mostly in enterprise software.

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Startup banking’s role in J.P. Morgan’s broader strategy

J.P. Morgan is a multi-100-year-old bank. It’s been around innovation and entrepreneurship for as long as it’s existed and we’ve dug deep into, specifically the innovation economy in a much deeper way almost a decade ago. So, we’ve been at this for quite a while. When I think about its value, I realize that the innovation economy is a material part of the economy, both nationally and globally. It’s no longer a sideshow. Innovation and growth, economically speaking, rely on technology, and technological advancements. And so our job is to make sure that the best innovators, both nationally and globally, can achieve their outcomes by providing them with world-class banking services across the board. And the great thing about the J.P. Morgan platform is it has a commercial bank, it has a private bank, and it has an investment bank. There is no vector of financial services that we can’t support an entrepreneur and their investors are in.

Steps J.P. Morgan is taking to build its focus in the startup banking area

We believe in supporting entrepreneurs from start to finish. Often, their journey begins in the proverbial garage, when they just have an idea. Our goal, in line with maximizing the chances of successful outcomes, is to be there early in that journey. This means supporting entrepreneurs when they are still thinking about effective networking, when they don’t know a ton about banking products and services, and when they need advice — like the insights we provide in our Startup Insights report. 

Much of this journey is about enabling and empowering entrepreneurs and increasing their probability of success. We aim to meet them where they are — whether that means engaging with them early on or in different regions beyond just California and New York. As a national business, we believe in meeting with entrepreneurs both in their physical spaces and at the specific timeline of their journey.

Addressing new entrepreneurs’ needs for community bank-level support

That’s the investment we’ve made over almost the entire last decade, but we’ve really doubled down over the last couple of years. We have a network of hundreds of bankers nationwide, focused on supporting both early and late-stage companies, so we are looking to cover that. As I mentioned, we’re creating value through networking, insights, connections, events, and sponsorships that foster a sense of community within the innovation economy.

But then it’s also the banking services. We offer a comprehensive suite of banking products, including multi-depository and liquidity solutions, venture lending, asset-based lending, and cash flow lending. We do the gamut inside of the commercial bank, and then help them realize their dreams and hopes in the public markets. Our investment bank works with us to help companies go public or conduct private placements, offering access to both public and private capital.

The concept is simple: you can’t outgrow J.P. Morgan. We focus on what’s best for the entrepreneur, recognizing that the innovation economy has changed. You’re no longer just raising $40 million at a Series C like you were 10 years ago. Companies could be raising $300 – $400 million at a Series C within 36 months, and 24 months from Series A. So the speed at which you need to raise large swaths of capital in some of the sub-sectors that exist in the innovation economy is pretty significant. And so the need for a bank like JPMorgan Chase to be at the front and center of the innovation economy isn’t just good for JPMorgan Chase, it’s good for the innovation economy.

Empowering women entrepreneurs and founders of color

It’s a great and honest question, and I’m glad that we talk about it and that we’re all trying to do something about it. Those are the numbers, and to your point, they may be even lower. And yes, for certain demographics, it’s even lower than 7%, so what can we do? 

It’s a question that I’ve grappled with for as long as I’ve been in my seat here, as well as in Silicon Valley Bank. It starts with the investment in a broad national startup banking business. Most of the underrepresented minorities as entrepreneurs are sitting at the early stage, and that means having to invest in an early-stage business. That is in many ways why JPMorgan Chase has invested in the early stage to maximize the outcomes of all entrepreneurs. We’re not just in Northern California and New York, we’re in Atlanta, we’re in Miami, we’re in Austin, we’re in Chicago, we’re in Colorado. The point of that is that, that welcomes the diversity of geographies. 

So, the first place is to be around the communities that matter to everybody. And so that’s sort of part one. Part two is to invest in a diverse employee base that can do that. We have a diverse employee base that’s national as well. And then third, I’d say, is investing in all of the variations of what entrepreneurs need. And that isn’t just access to capital, it’s also access to information and insights and networking. As you invest in all of that nationally, you increase the probability of allowing more representations into the innovation economy, which is a key part of our operating model.

Drivers of increased VC fintech funding and startup opportunities

I’ll answer your question specifically around fintech, but I think it’s also broadly around other sectors – I’m very bullish on a lot of other sectors. Specifically within fintech, it has been going on for several years; it’s not merely a recent phenomenon of one to two years. Over the last decade, we have seen the rise of fintech, with some of them with large valuations being a byproduct of the fact that it takes 10 years to hit the late stage. It started in earnest about a decade ago, encompassing various sub-sectors because of which you’re seeing improvements in the online banking experience. The emergence of new cards and advancements in wealth tech have all been part of this evolution. If we’re going to drill into a specific sub-sector of it, let’s just talk about wealth tech because it is in the Insights Report. 

The transfer of wealth is now beginning and shifting from the older generation to the newer generations — from Baby Boomers over to the subsequent generations. That’s creating a lot of interesting startups in the wealth tech space. The Baby Boomer generation was a little bit more used to the wealth management industry before the internet properly came online and was more accustomed to the traditional wealth management industry, which largely operated offline through phone calls and in-person interactions. In contrast, the subsequent generations have grown up in an app-native technological world.

These newer generations require simplicity and seamlessness in their mobile experiences, expecting effective digital support and advice. This has created and propagated the need for the digital experience in wealth management to come online in a big way. Managing wealth now needs to be fast, seamless, easy, and online, driving investments in wealth tech technologies.

Foundational needs of banking startups from their banks to thrive

What they need out of a banking partner from my perspective is a bunch of different things. 

I think the first thing is safety. Let’s not forget that ultimately it’s a financial institution, so safety and reliability become important. To me, stability, safety, and reliability come almost before anything else. At the end of the day, it is about banking and financial services and we have to take that seriously. We’re going into a world where cybersecurity is a real thing and J.P. Morgan invests millions and millions of dollars in making sure that we’re safe, reliable, and accessible to our clients at all times. 

Part two is all of the things that we talked about before that help make an entrepreneur succeed, and that is access to capital, information, and networks. Between safety, reliability, and access to all the things that help you become successful, that’s what you should expect out of your banking partner. Somebody who understands you, somebody who wants to grow with you, and somebody who can grow with you. 

I think it becomes really difficult to go from having a multivariate experience in financial services, where you’re doing one thing with somebody, another thing with somebody else, and something else with another person. It just becomes difficult to build cohesion around your financial needs. So, I’d say that’s a really important part as well.