Ashraf Hebera, head of startup banking at JPMorgan, may run startup finance these days, but he's once sat in the founder's chair. His experience in both worlds — as a founder and a decades-long career in finance, including 13 years at Silicon Valley Bank — has shaped his insights today.
Hebera appeared on the Equity Podcast to discuss the recent Startup Insights report, specifically taking a closer look at data that illuminates the latest early-stage investment trends, emerging sectors, and startup hubs outside of the Bay Area (Austin and Miami being two of those.) Taken as a whole, Hebera explained, the report offers founders insights into how to build the next unicorn.
Of course, to understand today's investment environment, Hebera and host Kirsten Kolosek looked back to 2021, the year when “ample liquidity” prompted the creation of more unicorns than ever before. Since then, the rate of unicorn creation has fallen by 88% compared to 21% for initial rounds.
But the decline isn't necessarily bad news, Hebera said.
“We've had some healthy years prior to 2021 and beyond,” Hebera said. “This year, some people are not feeling too good about the environment for the innovation economy, but we're still on track for a $180 billion year and deal counts heading toward the 15,000, 16,000 level. Those numbers are outside of the all-time high range. And they're comparable to the top five years for the innovation economy historically.”
Hebera further noted that aside from the macro factors of 2021, there are still great entrepreneurs and key technologies such as quantum computing, automotive tech, space tech, biopharmaceuticals, life sciences and climate tech are on the rise.
Hebera acknowledges that founders today have challenges.
“Right now, it's a little bit of a haves and have-nots environment,” he said, referring specifically to startups with AI products at their core and those that don't focus on that. “I think it's different depending on the type of company that's trying to get online. There are a lot of successful AI companies that have no problem raising capital. In fact, there's so much capital available that they're looking at things like private placements to get that capital, because they're raising $300 million, $400 million in Series Cs, which was unheard of at the time.”
Whether AI is at the heart of the startup or not, Hebera said he would “never underestimate entrepreneurship in the innovation economy,” before pointing to the growth of sectors like fintech, robotics and cleantech.
So how do founders make the right decisions when raising capital?
Hebera's recent startup insights report noted different characteristics investors are looking for today, such as founders from top universities, but Hebera cautioned that it varies and depends on the sector and product a startup is building.
In other words, you don't have to just go to Harvard or Stanford to raise funding: In certain fields, like robotics, technical expertise may be more important, he noted.
“There are many different ways to appear attractive,” he said, adding that having a great idea that you're passionate about is just as important as being persistent.
And, noting the recent discussion, we asked Hebera whether a leadership style like “founder mode” is important.
Hebera said that while Paul Graham's “Founder Mode” column contains many valuable ideas, he believes it is important to focus on the philosophy of Founder Mode rather than the details of it.
“For me, it's about resilience and passion and dedication to your idea,” he said, adding that what that looks like and what it feels like tactically will vary from entrepreneur to entrepreneur.
He warned against creating a single set of attributes because it could be exclusive.
“These attributes may work really well for certain people of a certain gender or a certain socio-economic background or who are lucky enough to be part of an ‘inner group’, such as a university or a previously successful company. So we should welcome the fact that these tactics look different than they have in the past, and I think that’s a great thing. And to me, it all boils down to the founders’ values: resilience, enterprising, innovative, [and] The ability to go out and do what you can, network, build relationships, be an advisor and generate great ideas that solve real problems.”
He added that he prefers these values-based traits over culture, “which can sometimes be a bit dangerous and exclusive,” he said.
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Equity is TechCrunch's flagship podcast produced by Theresa Loconsolo and posts every Wednesday and Friday.
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