First Citizens to Woo Startups and Rebuild SVB Business Model

Silicon Valley Bank’s new owner faces two challenges: improving business while restoring the bank’s reputation.

In a Financial Times interview published Sunday (April 23), Peter Bristow — the president of North Carolina-based First Citizens — said he is working to control deposit outflows and keep bankers from jumping ship to join competitors, all while trying to rebuild trust in a financial institution at the center of a global banking crisis.

“We are in the early days of getting them stabilized and back in business,” said Bristow, whose bank purchased Silicon Valley (SVB) last month after federal regulators took it over.

While First Citizens is keeping the SVB name and running it as a unit of its own bank, it has struggled to polish SVB’s tarnished brand.

“[SVB] was the number one bank in tech and life sciences for over 30 years and suddenly that went away, so we’ve spent a lot of time trying to give people confidence that we’re in the bank and plan to continue to run the model they were running,” Bristow said.

The report notes that some Silicon Valley startups and investors are skeptical of First Citizens, which has limited venture capital experience.

“A lot of what SVB did — events, mortgages, venture loans — made no sense economically unless you saw the full life cycle of the relationship,” the head of one multibillion-dollar venture operation told the FT. “They were able to do it because they knew everyone in the ecosystem.”

Bristow suggested his bank could re-examine SVB’s lending to venture capitalists and the companies they financed.

“As much as [venture lending] was a core tenet of what SVB did, the question was, did it create a lumpiness in deposits you may not want?” he said.

In an interview last week with PYMNTS’ Karen Webster, Amias Gerety, partner at QED Investors, said that venture debt will become a smaller industry with SVB under new ownership. And key players in the space will become choosier about the companies to whom they lend.

However, he emphasized that it’s not “whether you got capital from me, or a lender, or you bootstrapped,” that makes a company great but requires a great product, great growth and new ideas.

Meanwhile, PYMNTS also conducted interviews with a dozen finance chiefs in the wake of the SVB collapse, all of whom said the bank’s failure underlined the need for best practices.

Among them was Carlos Sanchez-Arruti, CFO at payments solution provider Mangopay, who said March’s banking crisis has “validated the discipline that CFOs need to have around cash management and treasury,” and served as a “wake-up call” for many companies and CFOs to return to basics.

Sanchez-Arruti added the new macroenvironment has made it vital for finance leaders to shift from a “sexier focus on just growth,” in favor of one that emphasizes long-term visibility over working capital and profitability.