Banking
JP Morgan wins First Republic; will it win over VCs and the startup world?
May 1, 2023
First Republic Bank was seized by federal regulators on Monday and sold in an auction, won by JP Morgan Chase.
San Francisco-based First Republic collapsed after the bank revealed in its earnings report that customers fled with more than $100 billion in deposits from its coffers following the failure of Silicon Valley Bank in March.
Like SVB, First Republic was a relationship-focused bank with high-touch services popular with many startups and venture capital firms. JP Morgan's challenge now will be to retain enough of these qualities to hold on to this customer base.
SignalFire, an early-stage VC firm, intends to remain a First Republic customer post-acquisition as long as JP Morgan keeps the majority of services intact.
"Hopefully [First Republic] is allowed to operate as it was versus become Chase branches," Chris Farmer, CEO of SignalFire, said via text message. He touted First Republic's white-glove services and understanding of tech and VC needs.
While First Republic wasn't known for lending to startups, about 12% of its $173 billion loan book comprised capital call lines of credit for private funds and their GPs.
As a part of the deal, JP Morgan will take on First Republic's loan book and assume roughly $92 billion in deposits.
JP Morgan benefited from the banking crisis even before it won the bid to buy First Republic. The largest bank in the US saw its deposits swell by $50 billion in March, but it was prepared to lose some of those customers to competitors.
Now, JP Morgan will also be tasked with ensuring that the acquired First Republic customers don't go elsewhere.
One VC who asked to remain anonymous said that he is concerned that First Republic will be fully absorbed into JP Morgan and, therefore, won't be able to offer the same level of customer care and support going forward.
But James Ulan, a senior analyst at PitchBook, said that JP Morgan will likely tread lightly through the integration process.
"JP Morgan has bought a lot of companies," he said. "I think they'll fold it in in a way that doesn't cause mass customer exodus."
Featured image by Spencer Platt/Getty Images
San Francisco-based First Republic collapsed after the bank revealed in its earnings report that customers fled with more than $100 billion in deposits from its coffers following the failure of Silicon Valley Bank in March.
Like SVB, First Republic was a relationship-focused bank with high-touch services popular with many startups and venture capital firms. JP Morgan's challenge now will be to retain enough of these qualities to hold on to this customer base.
SignalFire, an early-stage VC firm, intends to remain a First Republic customer post-acquisition as long as JP Morgan keeps the majority of services intact.
"Hopefully [First Republic] is allowed to operate as it was versus become Chase branches," Chris Farmer, CEO of SignalFire, said via text message. He touted First Republic's white-glove services and understanding of tech and VC needs.
While First Republic wasn't known for lending to startups, about 12% of its $173 billion loan book comprised capital call lines of credit for private funds and their GPs.
As a part of the deal, JP Morgan will take on First Republic's loan book and assume roughly $92 billion in deposits.
JP Morgan benefited from the banking crisis even before it won the bid to buy First Republic. The largest bank in the US saw its deposits swell by $50 billion in March, but it was prepared to lose some of those customers to competitors.
Now, JP Morgan will also be tasked with ensuring that the acquired First Republic customers don't go elsewhere.
One VC who asked to remain anonymous said that he is concerned that First Republic will be fully absorbed into JP Morgan and, therefore, won't be able to offer the same level of customer care and support going forward.
But James Ulan, a senior analyst at PitchBook, said that JP Morgan will likely tread lightly through the integration process.
"JP Morgan has bought a lot of companies," he said. "I think they'll fold it in in a way that doesn't cause mass customer exodus."
Featured image by Spencer Platt/Getty Images
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