The lender, founded with the goal of filling the void left by Silicon Valley Bank’s implosion, is in discussions to raise financing at an $8 billion pre-money valuation, the Financial Times (FT) reported Monday (Aug. 10), citing sources familiar with the matter.
The deal faced high demand and could be finalized within the weeks ahead, the sources added. As the FT notes, Erebor had already enjoyed the support of prominent Silicon Valley figures, and was founded by Palmer Luckey, co-founder of military contractor Anduril.
Erebor in February became the first bank chartered under the second Trump administration. Since then, the company has seen its deposits jump to $4.6 billion as of the end of July, a source familiar with the figures told Bloomberg.
The bank has already surpassed $100 million of annualized recurring revenue, the source added, with former U.S. official Michael Mosier and former American Express executive Anré Williams joining its board.
The FT added that Erebor has seen success in financing companies that are part of a new and “capital-intensive” surge of innovation in industries like defense and energy.
“There’s this reindustrialization of the U.S., where you have these companies that are going to need a financial partner that really understands how they work,” said one investor in Erebor.
The report added that Erebor’s co-founders chose to start a bank after the 2023 collapse of Silicon Valley Bank, which had been the chief lender for American tech start-ups and their investors from the venture capital space.
In a pitch to investors last year, Erebor spoke of its plans to offer lines of credit backed by crypto or private securities and loans for advanced artificial intelligence (AI) chips.
Although banks might see such loans as risky, Erebor has said its understanding of its customers’ businesses will let it more accurately weigh their risks and offer more attractive loan terms. Speaking with the Wall Street Journal, Luckey pointed to the example of his bank’s understanding of specialized assets like machine tools used to make high-precision components.
“You can predict the value of those very, very well,” he said. “We know that nothing’s going to come out of the sky and make those worth half of what they are next year.”
