▼ Summary
– Erebor, a bank founded by Anduril’s Palmer Luckey and backed by Peter Thiel, is in talks to raise at a valuation of at least $8 billion, nearly doubling its previous valuation from late last year.
– Its deposits have surged from $1.1 billion in late March to $4.05 billion, with about 400 new customers added in three months, and the bank expects to turn a profit by year-end.
– Erebor targets customers left by Silicon Valley Bank’s 2023 collapse, focusing on defense technology and cryptocurrency industries, providing loans for equipment and venture debt.
– The bank’s rapid approval for a national charter under President Trump has drawn scrutiny, with Senator Elizabeth Warren questioning whether founders’ political ties influenced the process.
– Erebor is expanding into riskier areas, including a preliminary deal with Banco de Venezuela for correspondent banking, despite US sanctions on the country.
A bank that was little more than a concept a year ago is now chasing an $8bn valuation, a figure most European lenders can only envy. Founded by Anduril’s Palmer Luckey and backed by Peter Thiel, Erebor is in early-stage talks to raise fresh capital at that price, nearly double the $4.35bn it commanded late last year, as first reported by Bloomberg. The company declined to comment, and negotiations remain fluid.
The growth, however, is undeniable. Erebor’s deposit base has surged from $1.1bn in late March to $4.05bn today, a near quadrupling in just three months. It added roughly 400 new customers in that period and expects to reach profitability by year-end. Not bad for a bank that only secured its charter in February.
Filling the SVB-shaped hole
Named after the treasure mountain in Tolkien’s The Hobbit, Erebor is targeting the clients left stranded after Silicon Valley Bank collapsed in 2023. It focuses on two sectors that have Washington’s full attention: defence technology and cryptocurrency.
Much of the recent deposit growth comes from hard-tech and defence manufacturers, which Luckey describes as firms “rebuilding America’s industrial base.” Erebor provides them with equipment loans and venture debt while also handling deposits and payments in dollar-backed stablecoins. Crypto-backed lending, however, has generated less demand than anticipated.
Luckey is quick to address any suspicion of self-dealing. “Zero percent of Erebor’s deposit growth this quarter has come from my own companies,” he stated. The rest, he explained, comes from “hundreds of new customers choosing Erebor because they want what we’ve built.”
Fast charter, sharp questions
The speed of Erebor’s rise has attracted scrutiny. It was the first bank to receive a national charter under President Trump’s second term, with regulators clearing it in just months. Senator Elizabeth Warren has voiced “serious concerns,” questioning whether the founders’ political connections accelerated the process.
Erebor’s backers read like a who’s who of the new Washington-Silicon Valley alliance. They include Thiel’s Founders Fund, Andreessen Horowitz, 8VC and Lux Capital , the same investors fueling defence startups and the same blur of tech and government that saw Marc Andreessen join the Pentagon’s board.
The bank is also venturing into riskier territory. It has signed a preliminary agreement with Banco de Venezuela to provide correspondent banking, a foothold in a country still under US sanctions. Luckey’s financial ambitions extend even further. Politico reports he is among the angel backers of a new US perpetual-futures exchange.
For a founder best known for drones and a $61bn defence valuation, banking is an unusual second act. But stablecoins and defence money are suddenly in vogue. Erebor has landed at the perfect moment.
(Source: The Next Web)
