Palmer Luckey's Erebor Bank is targeting a valuation of $8 billion.

      A bank that was scarcely known a year ago is now pursuing a valuation that many European banks can only aspire to. Erebor, established by Anduril’s Palmer Luckey and supported by Peter Thiel, is negotiating to raise funds at a valuation of no less than $8 billion, with its deposits nearly quadrupling in just three months.

      This new valuation would approximately double the $4.35 billion Erebor was valued at late last year, as reported first by Bloomberg. The company has chosen not to comment on this matter, and the discussions are still in their early stages.

      However, the growth is undeniable. Erebor’s deposit total has surged from $1.1 billion in late March to $4.05 billion today, having gained almost 400 customers in three months. The bank anticipates generating profit by the end of the year, which is impressive for an institution that received its charter just in February.

      Filling the gap left by SVB

      Erebor is named after the treasure mountain found in Tolkien’s The Hobbit. It aims to attract the clientele that was left stranded after the collapse of Silicon Valley Bank in 2023. The bank focuses on two sectors that resonate well with Washington: defense technology and cryptocurrency.

      According to Luckey, much of the growth is driven by hard-tech and defense manufacturers, which he describes as companies "rebuilding America’s industrial base." Erebor provides them with loans for equipment and venture debt while also managing deposits and transactions in dollar-backed stablecoins. However, interest in crypto-backed lending has been less than anticipated.

      Luckey is eager to dispel any doubts that might arise. "Zero percent of Erebor’s deposit growth this quarter has come from my own companies," he stated, adding that the remainder consists of "hundreds of new customers choosing Erebor because they want what we’ve built."

      Rapid charter approval raises concerns

      The rapid pace of Erebor's rise has drawn attention. It was the first bank to secure a national charter under President Trump’s second term, with regulators approving it in a matter of months. Senator Elizabeth Warren has expressed “serious concerns,” questioning whether the political connections of the founders facilitated the process.

      The bank's supporters resemble a map of the emerging Washington-Silicon Valley alliance, including Thiel’s Founders Fund, Andreessen Horowitz, 8VC, and Lux Capital. This group is also funding defense startups and reflects the ongoing intertwining of technology and government, highlighted by Marc Andreessen’s position on the Pentagon’s board.

      Erebor is also venturing into riskier territory, having signed a preliminary agreement with Banco de Venezuela to provide correspondent banking services, marking its entry into a country that remains under US sanctions. Luckey’s financial interests expand further, as Politico reports he is among the angel investors for a new US perpetual-futures exchange.

      For a founder known primarily for drones and a $61 billion defense valuation, entering the banking sector is an unexpected move. Yet, with stablecoins and defense funding recently gaining popularity, Erebor appears to have arrived at the opportune moment.