Silicon Valley Bank buy delivers shock and awe, opportunity to Triangle, investors say

Editor’s note: WRAL TechWire’s newest contributor is Dr. Sarah Glova, a globally recognized speaker, successful entrepreneur, university instructor, and business consultant. A seasoned educator and entrepreneur, Sarah is CEO of the award-winning digital media firm, Reify Media, With a Ph.D. in Instructional Technology and a Master of Science in Technical Communication, she is dedicated to cultivating forward-thinking work environments.

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RESEARCH TRIANGLE PARK – Raleigh is in international news right now. I’m speaking at two tech events in Europe this week, and on my travels, I get to see mentions of my hometown in the headlines, hearing about this “Raleigh-based” or “North Carolina-based” First Citizens Bank (FCB) that acquired Silicon Valley Bank (SVB).

Determined not to miss out on the buzz, I reached out to two Triangle-based investors and all-around ecosystem supporters to ask them what they thought of the news.

“I think my broad reaction is really shock,” Scot Wingo, founder of Spiffy and the Triangle Tweener Fund, told me in an email interview. “Who would have thought as recently as 60 days ago that our ‘little’ (bank relative) Raleigh-based FCB would be buying SVB.”

I’d have to agree—this was not on my 2023 bingo card.

Jason Caplain, General Partner and Co-Founder of Bull City Venture Partners, told me the deal was “yet another example of how the Triangle grabs the national spotlight.”

“I still believe it is very early innings for our region,” Caplain told me.

Sarah Glova

European Reaction

Of course, most of the SVB headlines in Europe are focused on SVB UK getting acquired by HSBC, one of the largest banking institutions in the world.

I can’t help but compare—SVB UK is getting acquired by this banking giant, but at home, SVB is getting acquired by First Citizens. HSBC total assets for 2022 were $2966.53B, according to Statista. First Citizens has around $109 billion.

I spoke with Rachel Onamusi, a London-based founder and CEO of VN Sync, a full-service marketing agency. Onamusi serves both European and US clients, and she told me that major events in America are sometimes “forewarnings” for future financial activity in Europe.

“For the most part, however, EU startups already have plenty on their plate to contend with,” she told me, citing changing EU legislation, the effects of Brexit, and “the rising rate of inflation leading to a corresponding drop in venture capitalist valuations,” as top concerns.

“The bank of England raised its base rate on the 23rd March, making it the 11th raise in the past 18 months,” Onamusi told me in an interview. “France is experiencing ongoing disruption and protests as a result of changes to work and labour policies, as well as the cost of living crisis.”

Certainly, the SVB headlines have been one of many to follow on this trip—and not necessarily in the top ten. I’ve changed transportation plans twice to avoid the French pension reform strike.

First Citizens’ deal for Silicon Valley Bank could be huge growth opportunity for Triangle, leaders say

Caplain shares advice for next steps

I asked Caplain what he thinks FCB should prioritize to help stabilize the SVB community, value, and legacy.

“First, I would recommend strong and enhanced communication from corporate and key contacts within the bank to customers and prospects,” he told me. “Second, what made SVB special was the people and the process. SVB has had close to a frictionless relationship for VCs and founders. And most important, retaining the team is critical.”

FCB posted about the acquisition on their LinkedIn page yesterday, and one SVB employee commented, “As an SVB employee, I’m glad to be part of this long-standing institution! Only up from here!”

Wall Street loves First Citizens as new owner of Silicon Valley bank – here’s why

Wingo shares an optimist’s perspective

Wingo told me he’s predicting a binary outcome, “either really great for FCB or bad,” and that “the jury is out.”

“As an entrepreneur I’m an optimist, so let’s think about that case first,” he told me.

In Wingo’s optimistic scenario, FCB has a chance to buy the loans and deposits and “really engage with that high-tech customer base.” In this scenario, FCB can help “fix what was broken at SVB and add new services that maybe SVB was reluctant to do.”

“They obviously will go overnight from great coverage in the SE to the West coast as well,” Wingo added.

Wingo’s optimistic scenario also imagines that SVB could open its doors to more types of startups.

“In the last 2-3 years, SVB, like most of the west coast venture capitalists, began to focus in on just B2B SaaS startups,” Wingo told me. “Those startups are great, don’t get me wrong, I started one and had a great ride in that space, but part of what makes the Triangle unique is our vast range of startup diversity. FCB, for example, already does a lot in life sciences, so my hope is they open the ‘investing aperture’ a bit and look outside B2B SaaS.”

Thinking through both sides of the coin, Wingo also shared a more negative perspective—what if FCB “caught the proverbial ‘falling knife’?” he wondered. In that scenario, “depositors continue to leave, the debts were all too risky, go bad, etc.,” he imagined.

But Wingo also supposed that FCB took time to assess the risk, and that they’re taking appropriate steps to manage that risk.

“Raleigh based banks aren’t known for their crazy risk taking, and I think that’s an asset in this acquisition and, in an ironic way, gives it credibility,” said Wingo.

All in all, Wingo shared that he’s hopeful.

“I think you give it a month or two, but in my optimistic view of the world, SVB just moved their HQ to Raleigh, and that has to be good for the region,” Wingo told me. “Hopefully in addition to some great new venture lending and founder-friendly banking options, it brings more outside investment and more attention to our already awesome, rapidly growing startup ecosystem.”

As if the freezing cold European “spring” weather wasn’t making me homesick enough, Wingo’s optimistic perspective on our region certainly did its job.

The post Silicon Valley Bank buy delivers shock and awe, opportunity to Triangle, investors say first appeared on WRAL TechWire.

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