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First Republic’s Seizure Adds to Venture Investors’ Banking Concerns

From WSJ

Regulators seized and agreed to sell the bulk of San Francisco-based First Republic to JPMorgan Chase & Co., heading off a collapse that threatened to reignite the recent banking crisis. “Similar to what we had with Silicon Valley Bank, this injects quite a bit of uncertainty into the market,” said Sunny Kumar, a partner of venture firm GSR Ventures. “The bigger challenge is what happens to the institutional memory and the way these banks work with industry.” SVB’s collapse in March prompted companies to shift money elsewhere. As fear of a banking contagion spread in the ensuing weeks, First Republic depositors also fled. Both institutions have been cornerstones of the startup ecosystem. Now investors worry whether or not other banks will embed themselves as deeply into the entrepreneurial market.


The banking crisis also is making it harder for startups to secure venture financing. Entrepreneurs have to plan for an extended fundraising campaign, said Heath Naquin, who helps digital-health startups navigate the venture landscape as vice president of government and capital engagement for University City Science Center, a Philadelphia nonprofit.

“If you’re going to do a fundraising, add a year to the timeline you think it’s going to take,” Mr. Naquin said.

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