Introduction Of JP Morgan

Ashraf Hebela, the Head of Startup Banking at J.P. Morgan, offers a unique perspective on the world of startup financing. Having worn both the founder’s hat and served in leadership roles across the financial sector, including a significant tenure at Silicon Valley Bank, Hebela has a front-row seat to the shifting landscape of early-stage investments and entrepreneurial strategies. His latest insights focus on how founders can navigate these changing tides—and why relying solely on “founder mode” isn’t the ticket to building a unicorn.

In a recent episode of the Equity podcast, Hebela discussed his Startup Insights report with host Kirsten Korosec. Their conversation delved into early-stage investment trends, emerging startup ecosystems like Austin and Miami, and how founders can position themselves to build the next generation of billion-dollar companies.

The Decline of Unicorn Creation: Not Necessarily Bad News

Reflecting on the post-2021 investment environment, Hebela highlighted how that year’s “ample liquidity” created a record number of unicorns—startups valued at $1 billion or more. However, since then, the creation of unicorns has slowed by 88%, compared to a more modest 21% decline in first financings. While some may see this as a downturn, Hebela offered a more nuanced view.

“Even in this year, where some feel pessimistic about the innovation economy, we’re still seeing trends towards a $180 billion year and deal volumes exceeding 15,000 to 16,000,” he said. These figures, Hebela noted, are well above historical averages and place 2023 among the top five years in the innovation economy.

The decline in unicorn creation, in Hebela’s view, signals a return to more sustainable and healthy entrepreneurial ecosystems. Stripping away the outlier effects of 2021, there remains a wealth of innovation in sectors such as quantum computing, automotive tech, space exploration, biopharma, life sciences, and climate technology. JP Morgan

AI’s Dominance and the ‘Haves and Have-Nots’

Hebela acknowledged that while opportunities remain plentiful, the landscape is uneven. Startups centered around artificial intelligence (AI) are experiencing a much different fundraising environment than those in other sectors. JP Morgan Companies with AI at their core are attracting unprecedented levels of capital, often pursuing rounds as large as $300 to $400 million at the Series C stage, amounts unheard of in prior years.

Despite this, Hebela emphasized that entrepreneurship remains alive and well across sectors, from fintech and robotics to clean technology. “I would never count out the entrepreneurial spirit,” he said, highlighting the diverse ways that startups continue to innovate and attract funding. JP Morgan

The Myth of the ‘Founder Mode’

One of the more thought-provoking aspects of the conversation was Hebela’s take on the notion of “founder mode,” a concept popularized by investor Paul Graham. While Hebela acknowledged the value of many of Graham’s ideas, he cautioned against a rigid interpretation of what it means to be a successful founder. In his view, resilience, passion, and commitment to the idea are far more important than adhering to any fixed set of behaviors or traits. JP Morgan

Hebela warned that idolizing a specific leadership style could become exclusionary. “Founder mode,” as it’s commonly understood, can privilege individuals from certain socioeconomic backgrounds, top-tier universities, or those with established industry connections. This risks alienating entrepreneurs who don’t fit that mold but may still have groundbreaking ideas. JP Morgan

“I think we need to be welcoming of the fact that those tactics will look different, and that should be a great thing,” Hebela said, stressing the importance of diversity in leadership approaches. He pointed to attributes like innovation, resilience, and the ability to build networks of trust as essential traits, regardless of background.

Value-Driven Founding Over Cultural Fit

Beyond the mechanics of fundraising and leadership, Hebela stressed that the values a founder brings to the table should be paramount. JP Morgan He highlighted qualities such as enterprising spirit, the ability to solve real problems, and the initiative to create advisory circles. In Hebela’s eyes, these core values often matter more than what is traditionally deemed “culture fit” within a startup. JP Morgan

“There’s a little bit of stuff where culture can get dangerous and exclusionary,” he said, underscoring the importance of fostering inclusive and diverse leadership across the startup ecosystem.

Key Takeaways for Founders

For founders looking to break through and secure funding in today’s evolving environment, Hebela’s advice is clear: embrace diversity in leadership styles, remain resilient, and pursue innovation relentlessly. While having a strong academic background or connections can help, it is the ability to solve real-world problems and adapt to market conditions that will ultimately lead to success.

Hebela’s insights suggest that while the current environment may appear challenging, particularly compared to the unicorn boom of 2021, there are still ample opportunities for entrepreneurs with the right mindset and approach. And as for the mythical “founder mode”? It’s less about checking specific boxes and more about embodying the spirit of innovation, resilience, and adaptability. JP Morgan

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