Securing funding and financial guidance is one of the toughest challenges for startups in the USA. While venture capital and angel investors often get the spotlight, investment banking services play a crucial role in helping startups raise capital, plan growth strategies, and manage complex financial transactions. Unlike traditional banks, investment banks work closely with startups to help them navigate mergers, acquisitions, IPOs, and private placements.
But which investment banking services are the best for startups in the USA? Let’s break this down using the Problem, Agitate, Solution—to highlight why this matters and how startups can make smart choices.
Why Startups Struggle with Financing Beyond Seed Stage
Most startups in the USA begin with seed capital—from personal savings, friends, family, or early angel investors. According to a Kauffman Foundation report, nearly 64% of startups in the U.S. rely on personal or family savings in their early stage. But as the company grows, these funds are not enough.
The problem emerges when startups need:
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Growth capital to expand operations.
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Strategic financial advice for scaling or entering new markets.
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Support in mergers or acquisitions when combining with another company.
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IPO planning to go public and raise large-scale funding.
At this stage, investment banking services become critical. However, most startup founders do not fully understand how investment banks can help. They also face another challenge: investment banks often focus on large, established corporations rather than early-stage businesses.
What Happens When Startups Ignore Investment Banking?
Let’s look at what happens when startups overlook professional financial advisory:
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Valuation Issues
Without expert banking advice, startups often miscalculate their valuation. A too-high valuation makes it harder to attract investors, while a too-low one dilutes ownership significantly.
Case Study Example: In 2017, several tech startups in Silicon Valley, including Jawbone, faced down-round funding (raising funds at a lower valuation than before) because they lacked structured advisory support in their earlier fundraising rounds. -
Missed Growth Opportunities
Without access to structured private placements or debt financing, startups risk slowing down growth. A study by CB Insights (2022) shows that 38% of startups fail because they run out of cash or fail to raise new capital. -
Complex M&A Deals Go Wrong
Mergers and acquisitions are critical for scaling. Startups often try to handle negotiations themselves, but without the expertise of an investment bank, they risk unfavorable deal terms. For example, when smaller health-tech startups attempted self-negotiated deals with large pharmaceutical firms in the mid-2010s, many faced legal disputes over intellectual property rights. -
IPO Challenges
Going public without structured investment banking support can be disastrous. Investment banks not only underwrite IPOs but also provide credibility to investors. For instance, WeWork’s failed IPO in 2019 was partly due to poor financial structure and valuation transparency—something a stronger banking partnership could have addressed earlier.
In short, startups without banking support often hit a wall when scaling.
Best Investment Banking Services for Startups in the USA
Now, let’s look at some of the best investment banking services available to startups in the U.S., based on real-world cases and relevance to early and growth-stage companies.
1. Silicon Valley Bank (SVB) – Specialized in Startups & Tech
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Why It Matters for Startups: SVB (before its collapse in early 2023, now acquired by First Citizens) was the go-to for startups, offering not just loans but also introductions to venture capital firms, structured debt financing, and IPO advisory.
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Services: Venture debt, IPO support, equity financing.
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Case Study: Over 50% of U.S. venture-backed startups in tech and healthcare worked with SVB. Startups like Roku and FitBit used SVB’s services in their early growth stages.
Lesson for Startups: While SVB’s collapse highlighted risks, the model of startup-focused investment banking is proven to work. Founders should look for banks that offer similar hybrid services.
2. Goldman Sachs – Emerging Growth & Startup Division
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Why It Matters: Goldman Sachs has a dedicated Emerging Growth division focusing on startups and mid-sized businesses.
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Services: Capital raising, M&A advisory, IPO underwriting.
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Case Study: Goldman played a role in Spotify’s direct listing IPO in 2018, offering strategic advisory on valuation and investor relations.
Lesson: Even though Goldman is known for big corporations, their startup-tailored services can help high-growth businesses entering Series C and beyond.
3. Jefferies Investment Bank
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Why It Matters: Jefferies has carved a space in helping startups, especially in healthcare, fintech, and technology.
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Services: Equity capital markets, debt financing, advisory.
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Case Study: In 2020, Jefferies advised CureVac, a biotech startup, in raising over $213 million through its IPO on Nasdaq.
Lesson: Jefferies is well-suited for startups in sectors requiring specialized industry expertise.
4. Houlihan Lokey – Known for M&A Advisory
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Why It Matters: Startups often get acquired rather than going public. Houlihan Lokey is the global leader in M&A advisory for mid-market companies.
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Services: Sell-side and buy-side M&A, restructuring, valuation.
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Case Study: In 2021, Houlihan Lokey advised multiple small fintech startups in acquisition deals with larger firms.
Lesson: For startups aiming for exit strategies, Houlihan Lokey is a strong choice.
5. Cowen & Company
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Why It Matters: Cowen focuses on growth companies in healthcare, industrials, and tech.
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Services: Capital raising, equity research, advisory.
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Case Study: Cowen helped Beyond Meat with its IPO in 2019, which became one of the most successful IPOs in the food-tech sector.
Lesson: Startups entering niche markets can benefit from investment banks that have deep sector expertise.
6. Boutique Investment Banks (Sector-Specific)
Not every startup fits with large players. Boutique firms can be ideal, especially for early-stage and niche startups. Examples include:
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SVB Leerink (Healthcare) – IPO and advisory for health startups.
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FT Partners (Fintech) – Exclusive focus on fintech startups.
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Qatalyst Partners (Tech M&A) – Known for advising startups like LinkedIn in its $26 billion acquisition by Microsoft.
Lesson: Boutique firms often provide personalized attention and deep industry knowledge that startups won’t get from bigger banks.
How Startups Should Choose the Right Investment Banking Partner
Here are practical steps for founders:
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Define Your Goal – Is it IPO, M&A, or growth funding? The bank you choose should align with this.
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Check Industry Fit – Go for banks with proven expertise in your sector.
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Consider Stage of Growth – Early-stage startups may benefit more from boutique firms, while later-stage companies may prefer Goldman Sachs or Jefferies.
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Look at Track Record – Review case studies of how they helped startups in the past.
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Evaluate Relationship Support – A good bank doesn’t just raise funds—it introduces you to investors, mentors, and industry connections.
Conclusion
For startups in the USA, investment banking services are not just about raising money. They’re about strategic guidance, valuation accuracy, deal structuring, and investor credibility. Ignoring these services can lead to funding shortages, poor deal terms, or failed IPOs.
From Silicon Valley Bank’s startup-first approach to Goldman Sachs’ emerging growth division and boutique banks with sector expertise, there are multiple options for founders. The key is to align with the right partner based on industry, stage, and growth goals.
Startups that leverage these services early don’t just raise funds—they build a financial strategy for long-term survival and success.