The sudden collapse of Silicon Valley Bank in March 2023 created a dramatic shift within the U.S. startup banking sector, prompting JPMorgan executives to rapidly assess whether they should attempt to purchase the troubled institution.
Doug Petno, co-head of JPMorgan’s commercial and investment bank division, recalled being called over by CEO Jamie Dimon during a retirement gathering when regulators urgently asked whether the banking giant would consider acquiring the failing lender.
“Jamie looks at me and says, ‘Get on this call,’” Petno told CNBC this week in an exclusive interview.
The conversation occurred during a period of intense panic among venture-backed companies as SVB customers withdrew tens of billions of dollars in deposits in a sudden flight to financial safety.
JPMorgan Declines Purchase But Gains Massive Client Influx
California regulators ultimately seized Silicon Valley Bank the following day, marking one of the most significant bank failures in the United States since the global financial crisis.
During that weekend, JPMorgan leadership debated internally whether acquiring the struggling lender made strategic sense, particularly given the scale of deposit withdrawals and uncertainty surrounding the bank’s stability.
The firm ultimately decided against pursuing a deal, partly because thousands of SVB clients had already begun opening accounts at JPMorgan during the crisis period.
“We had three years’ worth of incoming clients in a weekend,” said Petno, who is co-head of JPMorgan’s commercial and investment bank. “Onboarding teams were opening up accounts around the clock.”
Building A Dedicated Startup Banking Strategy
Recognizing the opportunity created by SVB’s collapse, JPMorgan executives moved quickly to expand their presence within the startup and venture capital ecosystem by building a more comprehensive banking platform for technology founders.
“We went to our board and said, ‘there’s a vacuum in the market,’” Petno told CNBC. “At that very moment, everybody saw the opportunity.”
In the weeks following the crisis, JPMorgan hired several key executives from Silicon Valley Bank, including former SVB Capital president John China, who now leads the firm’s innovation economy business.
The hiring push helped JPMorgan deepen its expertise in venture financing and startup banking services while accelerating the development of new products tailored specifically to early-stage technology companies.
Technology Partnerships Drive Strategic Growth
For JPMorgan, the startup banking initiative extends beyond deposit growth and represents a strategic effort to stay closely connected with emerging technological developments across the broader innovation economy.
With an annual technology budget approaching $20 billion, the bank frequently studies solutions developed by its startup clients to address challenges in areas such as cybersecurity, artificial intelligence and quantum computing.
According to Petno, when companies announce layoffs related to artificial intelligence adoption, JPMorgan teams often analyze those cases to understand the real operational changes driving the cost reductions.
The analysis frequently reveals that automation is only one factor in workforce cuts, with inefficient internal processes and excessive hiring during earlier growth phases contributing significantly to job reductions.
JPMorgan Aims To Become A Long-Term Partner For Founders
Since expanding its startup banking strategy, JPMorgan has dramatically increased its presence in the sector, growing its client base to nearly 12,000 companies supported by more than 550 bankers across both U.S. coasts.
The bank’s ultimate objective is to establish itself as a full-service financial partner capable of supporting founders throughout every stage of their business lifecycle, from early funding rounds through public listings.
“Once you’re onboarded, you can never outgrow JPMorgan, from unicorn all the way to a Magnificent 7,” Petno said.
