With SVB Acquisition, First Citizens Enters Another Big Biotech Market
This week’s acquisition of a majority of Silicon Valley Bank’s assets by North Carolina-based First Citizens BancShares could impact the life sciences ecosystem, giving a financial institution with deep roots in the industry a foothold in two more of the country's innovation hubs.
A significant source of capital for startups in two of the nation’s most established markets, Boston and the Bay Area, has been acquired by an institution based in a rising market, the Research Triangle, which has seen explosive growth in lab and biomanufacturing real estate.
Matt Gardner, leader of CBRE's advisory life sciences practice, says the acquisition is “likely to be welcome news to biotech startup stakeholders.”
“We heard indications of a strong desire in the venture community to see those uncommon tools and resources continue somehow,” he said, referring to SVB’s relationship to biotech.
The deal was a way “to support growth in the innovation and technology sectors in both Silicon Valley Bank’s markets and in the Research Triangle,” First Citizens said in a release, adding, “Silicon Valley Bank’s large portfolio of client relationships across private equity and venture capital firms and their portfolio companies nicely complements First Citizens’ existing customer base.”
First Citizens was able to pick up $72B in assets at the discount price of $16.5B, and all domestic SVB clients, including many biotech and life sciences startups. In its Q4 2022 report, SVB said it has offered services to half of 2022’s venture-funded healthcare companies and was involved in 44% of health and tech IPOs. Roughly 12% of its $173B of deposits were for life sciences and health companies.
While the exact strategy of the expanded First Citizens, and its approach to biotech and venture investing, remains to be seen, there have been positive signs. First Citizens Chairman and CEO Frank Holding said in a statement that the bank is "committed to building on and preserving the strong relationships that legacy SVB's global fund banking business has with private equity and venture capital firms."
North Carolina tech circles seem very pleased by the news, seeing the acquisition as a sign of the region’s ascendance. Many believe that, if the family bank business, which has been run by three generations of the Holding family, can acquire banking talent and connections, not just assets, it can lure companies and talent to the Research Triangle region, and strengthen already robust tech and biotech sectors. A recent CBRE report predicts the Raleigh-Durham region, a growing biomanufacturing hub, will see roughly 700K SF of lab space delivered this year, nearly three times 2022.
Jason Caplain, general partner and co-founder of Bull City Venture Partners, told WRAL the First Citizens deal was “yet another example of how the Triangle grabs the national spotlight.” Scot Wingo, founder of Spiffy and the Triangle Tweener Fund, added that he felt the best-case scenario for the acquisition was that FCB retains SVB’s talent and relationships, and helps the bank pivot away from software-as-a-service startups and “open the investing aperture” and look more at Triangle-region life sciences.
It also calms current uncertainty during what could be seen as the start of momentum during a downturn in biotech investment during the first half of 2022.
“We saw VC activity in life sciences trend upward again in Q4 2022,” Gardner said. “So, despite a general slowdown in financing activity in the sector, there are some signals that the early stage landscape remains active, though accompanied by lower valuations and more cautious investor attitudes. With all these factors in mind, we also expect partnering activity to continue to be a heightened priority for many growth companies this year.”
