The latest takeover won’t stem the crisis, argues Peter Hébert, cofounder and managing partner at Lux Capital. “It is a major U.S. banking issue,” he told Term Sheet yesterday. (He said Lux banks with Silicon Valley Bank, now owned by First Citizens, First Republic, and its new owner, JPMorgan, among others.) But he describes the JPMorgan acquisition as “probably the best of all outcomes given the circumstances.” 

After over a month of hemorrhaging deposits, and despite a $30 billion deposit infusion from banks like JPMorgan and Citi, JPMorgan Chase finally bought First Republic after the failing bank was taken over by the FDIC on Monday morning. Though not quite as heavily exposed to the tech sector as Silicon Valley Bank, which failed back in March, First Republic also catered to the startup and venture community. 

But some wary VCs like Hébert are processing more existential questions in the wake of the bank collapses: “Why should a regional bank exist?…Why would anyone ever make those deposits and put that cash into a bank that’s not JPMorgan, Bank of America, Citigroup?…No one can give me a good answer.”

Others like Carter Reum, cofounder and partner at early-stage firm M13, think “we might see more regional banks in distress,” but that “this is not a tech industry issue,” it’s a “macro issue caused by rising interest rates and lessons in risk management.” 

Lux’s Hébert has a bigger concern: where the “storm clouds,” as he puts it, could gather next. He believes it will be commercial real estate, where he notes regional banks are disproportionately large lenders. “My view here is this morphs.” Instead of Silicon Valley or tech, “I think commercial real estate will be the eye of the storm,” he argues, pointing to bigger factors like the work-from-home culture, the COVID impact with “all of these leases rolling off,” and sensitivity to spiking interest rates.  

Meanwhile, as a couple of VCs mentioned, it’s unclear how the First Republic acquisition will impact the customer service startups and VCs were accustomed to—including favorable lines of credit. “JPMorgan’s business banking is not nearly as friendly as what Silicon Valley Bank or First Republic’s was,” Eric Bahn, cofounder and general partner at pre-seed VC firm Hustle Fund, told Term Sheet yesterday. He says Hustle Fund banks with First Republic, as does roughly 20% to 25% of their portfolio. 

Bahn says he’s concerned for emerging managers in particular: “It was already really difficult to be an emerging manager trying to find a good banking partner. And really, there [was] always just two real choices: Silicon Valley Bank, or First Republic.” Now, he’s unsure how emerging managers will establish good banking relationships “from scratch.” 

“Maybe it will be just business as usual,” following the acquisitions of both banks, but “I worry a little bit about, you know, are they going to get the same kind of service?”

That’s also a concern for others like Monique Woodard, founding partner and managing director at Cake Ventures. She sees the failure of regional banks as a huge loss to the startup ecosystem, especially for those emerging directors and underrepresented groups in VC. She added that many of the big banks have historically not been as supportive and willing to work with startups and emerging funds. “One of the concerns that I have is that banking is now very concentrated,” she said. She and many portfolio companies have been longtime customers of First Republic, and she has hope that JPMorgan can step up to the plate. “I do remain really worried about underrepresented GPs, underrepresented founders, women, and what it means for our businesses,” she explained. 

“I never feel like it’s the end,” Woodard added. “I think people will remain skittish for quite some time.” 

See you tomorrow,

Anne Sraders and Lucy Brewster
Email: anne.sraders@fortune.com and lucille.brewster@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Simpplr, a Redwood City, Calif.-based employee experience platform, raised $70 million in Series D funding. Sapphire Ventures led the round and was joined by Norwest Ventures, Tola Capital, and Salesforce Ventures. 

- Campus, a New York-based collegiate education platform, raised $29 million in funding. Discord founder Jason Citron, OpenAI founder Sam Altman, Figma founder Dylan Field, Lachy Groom, Bloomberg Beta, Founders Fund, Rethink Education, Reach Capital, and Precursor Ventures invested in the round.

- Pattern Bioscience, an Austin-based diagnosis and antibiotic susceptibility testing company for bacterial infections, raised $28.7 million in Series C funding. Illumina Ventures and Omnimed Capital led the round and were joined by the Antimicrobial Resistance Action Fund and Daleshaw. 

- ODAIA, a Toronto-based commercial insights SaaS platform developer for pharmaceutical companies, raised $25 million in Series B funding. Threshold Ventures and Monograph Capital co-led the round and were joined by Wittington Ventures, Flint Capital, Women in Technology Venture Fund, StandUp Ventures, and Graphite Ventures.

- Frontline Wildfire Defense, a San Francisco-based wildfire defense company, raised $6.4 million in seed funding led by Echelon. 

- NinjaTech AI, a Palo Alto-based A.I. virtual assistant, raised $5 million in seed funding. SRI Ventures led the round and was joined by Candou Ventures, DCVC, Lazlo Bock, and others.

- Genemod, a Seattle-based workspace collaboration software platform for biopharma research and development teams, raised $4.5 million in seed funding co-led by defy.vc and LDV Partners.

- Marble, a New York-based insurance platform, raised $4.2 million in seed plus funding. Distributed Ventures led the round and was joined by Blue Collective, Goodwater Capital, CE Innovation Capital, and others. 

- Sourse, a San Francisco-based vitamin-infused chocolate company, raised $2.4 million in seed funding. New Theory Ventures, H Ventures, JAWS Ventures, Satori Capital, Short List Capital, Harlo Capital, and LDR Ventures.

PRIVATE EQUITY

- Crestview Partners acquired a minority stake in The Gersh Agency, a Beverly Hills, Calif.- and New York-based entertainment agency. Financial terms were not disclosed.

- HMH, backed by Veritas Capital, acquired NWEA, a Portland, Ore.-based educational research and assessment company. Financial terms were not disclosed. 

- Pathstone agreed to acquire Brainard Capital Management, an Austin-based investment consulting and advisory services provider. Financial terms were not disclosed. 

- VMG Health, backed by Northlane Capital Partners, acquired BSM Consulting, a Reno, Nev.-based health care consulting firm. Financial terms were not disclosed. 

OTHER

- Rêv Worldwide, in partnership with funds advised by Searchlight Capital Partners, acquired the Netspend Austin-based consumer business, from Global Payments. The deal is valued at $1 billion. 

- Crane Engineering acquired Professional Pump, a Belleville, Mich.-based pumps and fluid process equipment distributor. Financial terms were not disclosed. 

IPOS 

- ACELYRIN, an Agoura Hills, Calif.-based late-stage biotech developing inflammatory diseases therapies, plans to raise up to $370.8 million through the sale of 20.6 million shares priced between $16-18.

SPAC

- Above Food, a Regina, Canada-based food company, agreed to go public via a merger with Bite Acquisition Corp., a SPAC. The deal is valued at $319 million. 

FUNDS + FUNDS OF FUNDS

- Kian Capital Partners, an Atlanta- and Charlotte, N.C.-based private investment firm, raised $400 million for a fund forced on lower middle-market investments.