HSBC vs. JP Morgan Chase: Banking services for startups
The right bank provides your startup with essential services like business checking, but also offers important services that are aimed at startups, like flexible credit and access to capital.
As an accounting firm specializing in startups, Kruze Consulting understands the importance of choosing the right banking partner for your growing business, working with you to address the unique challenges that startups face. Also, the right bank can scale its services as your startup grows, sparing you the hassle of changing banks in the future.
Kruze Consulting’s startup clients collectively hold nearly $4 billion in cash across various online and traditional banks, which gives us unique insights into the banking needs of founders. Two banks that provide services for startups are HSBC and JP Morgan Chase, so let’s look at their services.
A note on big banks like HSBC and JP Morgan Chase
JP Morgan Chase and HSBC are some of the largest financial institutions in the world, and with that comes a lot of benefits – including, hopefully, increased safety. Reporters label these as “too big to fail” for a reason. But with that size comes some difficulty in navigating to the right group to serve VC-backed startups. Both banks have innovation and tech startup focused groups – but their core small business offerings are not tailored enough to be what we’d recommend to a VC-backed startup founder. So if you are considering HSBC or JPMC, make sure you do your homework and get into the right part of the commercial bank – not the retail bank, and not just the random branch office down the street. At Kruze, we can introduce you to the right groups, and when our clients ask about choosing a big bank we make sure that they get into the right team and correct banking accounts that are built for startups, not traditional SMBs.
HSBC Innovation Banking
Key features for startups
- Tailored solutions. HSBC offers Innovation Banking Solutions designed specifically for early-stage and growing companies in the innovation economy. HBSC’s products scale with your startup as it grows, from pre-seed to IPO.
- Competitive interest rates. HBSC offers competitive interest rates on different accounts, including checking, savings, and certificates of deposit (CDs), so you earn more for your business.
- Simplified commercial cards. You’ll have more control over your business expenses with HBSC’s card options, including corporate cards and purchasing cards, with the ability to create virtual cards. You’ll also get waived spend requirements and exclusive travel benefits.
- Digital banking. You can manage your everyday banking through HSBCnet, HBSC’s digital banking platform.
- Dedicated relationship management. You can get expert banking guidance from a dedicated Relationship Manager.
Industry expertise
HSBC provides dedicated teams covering various tech sub-sectors, including:
- Enterprise software
- Consumer internet
- Frontier technologies
- Climate technologies
- Fintech
Global reach
HSBC offers support for international expansion through HSBC Global Wallet, streamlining foreign currency transactions.
JP Morgan Chase Innovation Economy
Key features for startups
- Comprehensive services. JP Morgan Chase offers a full range of financial solutions tailored specifically for startups, from seed to IPO and beyond. In addition to banking services, JP Morgan Chase has established partnerships that offer startups discounts on services like accounting, insurance, human resources, payroll, and others.
- Digital tools. The bank provides digital tools that benefit startups, including platforms like Chase Connect®, a digital account management system, and J.P. Morgan Access®, which provides global cash management, for streamlined banking and financial operations.
- Commercial card solutions. JP Morgan Chase offers a range of commercial cards that can be tailored to your specific needs and evolve as your startup grows, including the Ink suite of business cards, which cater to different business sizes and spending.
- Cashflow management. The bank offers Cashflow360℠ for automated invoicing, approvals, and reconciliation.
- Investor network access. Through its Innovation Economy team, JP Morgan Chase provides access to founders, investors, and partners to help startups succeed. In addition, the bank offers Capital Connect, an exclusive network of companies, general partners, and limited partners, to help startups raise capital.
- Venture debt. JP Morgan Chase offers venture debt options with flexible financing options to help extend runway, bridge funding gaps between rounds, and improve cash flow.
Industry focus
JP Morgan serves startups across various sectors, including:
- E-commerce
- AI
- Green economy
- Fintech
- Consumer products
- Life sciences
Startup-specific approach
- Added nearly 200 bankers to its innovation economy division in 2023.
- Offers a simplified payments platform designed for basic startup banking needs.
Comparison Table
| Feature | HSBC | JP Morgan Chase |
| Target Market | Focused on tech sub-sectors | Broad range of startup industries |
| Dedicated Startup Services | Innovation Banking Packages | Innovation Economy Division |
| Global Banking Solutions | HSBC Global Wallet | International network and services |
| Digital Banking Platforms | HSBCnet | Chase Connect® and J.P. Morgan Access® |
| Venture Debt | Available | Available |
| Relationship Management | Dedicated managers | Specialized startup bankers |
What to look for in a startup bank
When selecting a banking partner for your startup, you want to make the best choice. Here arre some important considerations:
- Financial health. Choose an established bank with a strong capital base and healthy balance sheets. Recent events have underscored the importance of choosing a financially secure institution to safeguard your startup’s assets.
- Accounting software compatibility. Prioritize banks that offer smooth integration with popular accounting platforms like QuickBooks Online. A good technological infrastructure can significantly streamline your financial management processes, saving you time and resources.
- Responsive support. Select a bank that provides fast and accessible customer service, particularly for urgent situations. Banks specializing in startups often excel in this area, understanding the unique needs of emerging businesses.
- Robust cash management. Look for banks offering strong cash management solutions that allow you to earn interest on your deposits. Startups with substantial amounts of cash from funding rounds can maximize the yield on their fund reserves and boost their financial position.
- Venture debt. Consider banks that offer venture debt options. This form of financing from banking institutions often comes with more favorable terms compared to fund-based lenders, typically offering greater flexibility and fewer restrictive covenants.
- Cutting-edge digital solutions. Banks that are committed to technological advancement offer features, like reliable bank feeds and process automation, that can help you manage your finances efficiently.
Can you use both HSBC and JP Morgan Chase?
Yes, you can, and in fact we strongly recommend having at least two banking partners.
Many of our clients have more than one bank because of the benefits that having two financial partners provides, like:
- Risk mitigation. Distributing funds across multiple accounts reduces the potential for fraudulent activities, as no single account holds all your startup’s assets. Furthermore, maintaining a separate account with sufficient funds to cover a couple of months’ payroll ensures business continuity in case one financial institution encounters difficulties.
- Financial organization. Establishing dedicated accounts for specific purposes, such as sales tax collection or expense categories like income tax payments, enhances financial tracking and monitoring capabilities. This approach simplifies the management of your startup’s finances.
- Yield optimization. Startups with substantial cash reserves may want to explore opportunities to generate higher returns through low-risk investment options. Using a second financial institution to put funds in money market accounts or Treasury securities can help generate income for your startup.
What are the key differences between HSBC and JP Morgan Chase?
Both HSBC and JP Morgan Chase offer important services for startups, but the choice between the two will depend on your startup’s specific needs, industry focus, and growth stage. If you’re looking for a banking partner, we recommend discussing your startup’s requirements with representatives from both banks to determine the best fit for you.
