Erebor: A Mountain of Potential

“You don’t change a winning team” — Brazilian proverb

Erebor, also known as the Lonely Mountain, appears in J.R.R. Tolkien’s The Hobbit as the home of the Dwarves and the vault of their immense wealth in gold, gems, and the prized Arkenstone. It was seized by the dragon Smaug, who ruled it until his killing.

Keeping with the tradition of drawing names from Tolkien’s works (Anduril and Palantir), Anduril founder Palmer Luckey, together with Palantir’s Joe Lonsdale (8VC) and Peter Thiel (Founders Fund), are once again joining forces — this time to create Erebor Bank.

Erebor applied for a national bank charter in June, with approval expected in Q3 or Q4 — a milestone that would enable it to accept deposits, issue loans, and gain access to Federal Reserve payment systems along with FDIC insurance. The founders intend to capitalize on the current regulatory openness in banking, as well as their political influence, to build a crypto-focused institution modeled on the role Silicon Valley Bank once held in the San Francisco Bay Area tech ecosystem.

Its target clientele would include startups in sectors such as crypto, AI, and defense, along with wealthy and ultra-wealthy individuals working in these fields. Erebor argues that these business clients are “not well served by either traditional or disruptive financial institutions,” citing limited access to credit as a key gap. To mitigate the risks of focusing on frontier industries, the bank plans to maintain a conservative balance sheet.

Erebor also has significant crypto ambitions. It aims to become “the most regulated entity conducting and facilitating stablecoin transactions, while promoting broader acceptance of stablecoins.” Erebor further states it would accept cryptocurrencies as collateral for certain loans.

Erebor’s Series A raised $250M at a $2B pre-money valuation — an exceptional figure for a first funding round. While Fabrica Ventures focuses on Series C and beyond, the founders’ exceptional track record, together with our successful co-investments in Palantir, Anduril, and Addepar, left our Investment Committee with no doubt in approving our participation in Erebor’s Series A.

Conclusion

Erebor is more than a bank: it’s a bold challenge to the status quo. By blending the stability of traditional finance with the innovation of crypto, it has the potential to become a cornerstone for the next generation of startups. For us, it’s a conviction in the founders’ ability to execute and in the inevitable integration of crypto into mainstream finance.

As Tolkien wrote, “Even the smallest person can change the course of the future.” In fintech, Erebor may show that even the boldest vision can be realized, when powered by the right minds.