Billionaires Launch Erebor Bank to Fill Silicon Valley Bank Gap

Peter Thiel, a prominent figure in the tech and crypto industries, is reportedly leading a group of billionaires to launch a new financial services firm called Erebor. This initiative aims to fill the gap left by the collapse of Silicon Valley Bank, which had been a significant financial institution for the tech and startup communities. The new bank has applied for a US bank charter, which allows financial institutions to operate as a bank.

Erebor will focus on serving startups and cryptocurrency companies, providing a range of financial services tailored to the needs of these sectors, including support for cryptocurrency transactions and other digital assets. The involvement of high-profile figures like Peter Thiel adds credibility to the venture, as Thiel is known for his investments in innovative technologies and his support for the crypto industry. Thiel’s venture fund, Founders Fund, is among the bank’s early investors. In addition to Thiel, the group reportedly includes Palmer Luckey, co-founder of defense contractor Anduril, and Joe Lonsdale, founder of 8VC.

The collapse of Silicon Valley Bank in March 2023 left a massive gap in the market, as the bank had served about half of all venture capital–backed tech and life sciences companies in the United States. Its failure set off a domino effect, contributing to a broader banking crisis that also took down Silvergate Bank, Signature Bank and First Republic Bank. The fallout dealt a heavy blow to the digital asset market, with crypto investment funds losing a significant portion of their assets under management in just one week. The collapse of Silicon Valley Bank specifically put significant pressure on lending within the venture capital ecosystem.

Despite its collapse, Silicon Valley Bank still operates today as a division of First Citizens Bank, which acquired the company in late March 2023. Its focus continues to be on private equity, technology and the life sciences industry. The launch of Erebor comes at a time when the financial landscape for startups and crypto firms has been significantly disrupted. The collapse of Silicon Valley Bank has left many companies scrambling for alternative banking solutions, and Erebor aims to provide a stable and reliable option.

In addition to serving crypto companies, Erebor reportedly aims to become a major lender for early-stage startups and other “riskier” firms that may struggle to access capital amid tighter banking regulations. The involvement of these prominent figures suggests that there is a growing demand for banking solutions that cater to the unique needs of these industries. The launch of Erebor and the other new bank initiatives highlights the growing importance of the crypto industry and the need for financial institutions that can support its growth. As more companies and investors turn to cryptocurrencies and other digital assets, there is a growing demand for banking solutions that can facilitate these transactions and provide the necessary financial services. The success of these new banks could have a significant impact on the future of the crypto industry.