JPMorgan Chase Captures the Market as Startups Now Maintain
at Least Two Separate Banking Relationships
SAN
FRANCISCO, March 28, 2024 /PRNewswire/ -- Kruze
Consulting, the startup accounting and CFO consulting firm
servicing more than 800 venture funded startup clients, has
released new data on how startups have changed their banking
strategies a year after the SVB collapse. According to the data,
JPMorgan Chase has gained the most significant market share -
moving from about 15% pre-SVB to more than 60% by the end of 2023.
Additionally, almost all startups maintain at least two banking
relationships and some VCs are even demanding this strategy in
their financing documents.
Before the crisis, close to 60% of startups had an account with
SVB and SVB held 50% of all startup cash. Now, less than 20% of
startups' cash is collectively with SVB, and no single bank holds
half of the startup ecosystem's cash.
A new analysis from Kruze also analyzed how startups created
after the crisis are banking. Half of all new startups have an
account with JPMorgan Chase, 40% with Mercury and just over 25%
with Brex (both of which are not technically banks!), whereas only
8% have opened SVB accounts. And Mercury has become the defacto
leader in new startup deposits, holding half of all newly formed
startups' cash. It appears now that startups favor the strategy of
pairing a large institutional bank with the startup-focused
offerings from Brex or Mercury.
"The way startups look at banking has forever changed post-SVB.
Pretty much every startup now maintains at least two separate
banking relationships, so moving cash between banks can be faster
than it was pre-SVB," said Healy
Jones, Vice President at Kruze Consulting. "This is a great
hedge against another crisis, but it also makes another crisis more
feasible as startups can run from their bank faster than
before."
The rise in other banks has been slow but steady, with a number
of more traditional banks trying to win share by selling their
safety - and often selling venture debt. However, the rise of the
non-banks with solid UX like Mercury and Brex does clearly show
that many founders are choosing speed and an app user interface
over the well publicized balance sheets that the biggest,
traditional banks have. As we move forward, the competition among
banks will likely intensify, focusing on who can offer the most
seamless and supportive banking experience to the entrepreneurial
community, indicating that the evolution sparked by the SVB
collapse is far from over.
About Kruze Consulting
Kruze is a leading provider of
accounting, tax, CFO and finance advice to over 800+ startups
across the US, and has been named as one of the fastest growing CPA
firms in the country. To date, Kruze's clients have raised over
$15 billion in venture capital and
are market-leading Saas, software, eCommerce, biotech and FinTech
startups. Founded in 2012 by Vanessa
Kruze, a Big Four alum, startup controller and CPA, the firm
manages accounting, tax, finance, and HR for some of the fastest
growing startups. Everything including interim CFO Consulting,
financial modeling, startup tax returns, venture debt consulting,
409A valuations, bookkeeping, AR/AP, and early-stage fundraising
advice can be seamlessly managed by the professionals at Kruze.
Visit https://kruzeconsulting.com/ to learn more.
Press Contact:
Mike
West
375299@email4pr.com
(415) 689-8574
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SOURCE Kruze Consulting