Tech-oriented lender Erebor Bank is in advanced talks to raise about $1.5 billion, according to the Financial Times. The fundraising round would value the company at $8 billion, according to some reports; other reports place the valuation at $9.5 billion.
Total deposits held by Erebor Bank as of the end of July.
The proposed investment would nearly double the bank’s private-market value within months. Earlier this year, Erebor raised capital at a $4.35 billion valuation, also reported by the Financial Times.
Several firms are expected to make large commitments to the round. These include Lux Capital, Human Capital, Valor Equity Partners, Andreessen Horowitz, and SV Angel. Existing investors 8VC and Haun Ventures are also set to participate.
Rapid growth and regulatory framework
Erebor Bank is a year-old firm that received final U.S. approval to operate in February. During its first three years, U.S. regulators require the bank to maintain a leverage ratio of at least 12%.
The bank’s total deposits grew from $1.1 billion at the end of March to $4.6 billion by the end of July. This growth was driven by clients in the crypto, artificial intelligence, and defense sectors.
Erebor targets companies working in crypto, AI, defense, and manufacturing. It also serves payment companies, investment funds, and trading firms. Planned services include deposits, credit, stablecoin products, treasury management, and payments.
Lending activities and backing
The bank’s lending push includes a $200 million credit facility for nuclear start-up Valar Atomics. Valar Atomics stated that Erebor led the facility as administrative agent, working with JPMorgan, Crescent Cove, and Hercules Capital.
Erebor Bank is backed by Silicon Valley investors. Erebor Bank is backed by Palmer Luckey.
