Palmer Luckey’s Erebor bank eyes an $8bn valuation as deposits quadruple

A bank that barely existed a year ago is now chasing a valuation most European lenders can only dream of. Erebor was founded by Anduril’s Palmer Luckey and backed by Peter Thiel. It is in talks to raise at a valuation of at least $8bn, and its deposits have almost quadrupled in three months.

That would roughly double the $4.35bn Erebor fetched late last year, according to Bloomberg, which first reported the talks. The company declined to comment, and the discussions are early.

The growth, though, is real. Erebor’s deposit base has jumped from $1.1bn in late March to $4.05bn today. It added nearly 400 customers in three months. It expects to turn a profit by year-end. Not bad for a bank that only won its charter in February.

Filling the SVB-shaped hole

Erebor takes its name from the treasure mountain in Tolkien’s The Hobbit. It is chasing the customers stranded when Silicon Valley Bank collapsed in 2023. It targets two industries close to Washington’s heart: defence technology and cryptocurrency.

Much of the growth, Luckey says, comes from hard-tech and defence manufacturers. He calls them firms “rebuilding America’s industrial base.” Erebor lends them money for equipment and venture debt. It also handles deposits and payments in dollar-backed stablecoins. Crypto-backed lending, though, has drawn less demand than expected.

Luckey is keen to head off the obvious suspicion. “Zero percent of Erebor’s deposit growth this quarter has come from my own companies,” he said. The rest, he added, is “hundreds of new customers choosing Erebor because they want what we’ve built.”

Fast charter, sharp questions

The speed has drawn scrutiny. Erebor was the first bank to win a national charter under President Trump’s second term. Regulators cleared it within months. Senator Elizabeth Warren has raised “serious concerns,” questioning whether the founders’ political ties smoothed the path.

Its backers read like a map of the new Washington-Silicon Valley axis. They include Thiel’s Founders Fund, Andreessen Horowitz, 8VC and Lux Capital. It is the same crowd bankrolling defence startups. It is the same blur of tech and government that saw Marc Andreessen join the Pentagon’s board.

The bank is also reaching into riskier ground. It has signed a preliminary deal with Banco de Venezuela to provide correspondent banking. That is a foothold in a country still under US sanctions. Luckey’s financial ambitions run wider still. 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 fashion. Erebor has landed in the right place at the right time.