A consortium of prominent billionaires, including Peter Thiel, is planning the launch of a novel financial institution named Erebor, designed to serve the startup and cryptocurrency industries following the implosion of Silicon Valley Bank (SVB). The initiative is reported by the Financial Times, citing confidential sources.
Financial Services Firm Aiming for Bank Charter
Erebor intends to operate as a traditional bank when its application for a US bank charter is approved. Founders Fund, the venture capital fund helmed by Peter Thiel, is acting as an early investor in the project. The venture, alongside the planned bank, represents a new funding attempt by Thiel, who is also noted for his advocacy of digital assets.
Founders and Partners
The planned Erebor entity will be spearheaded by Thiel and joined by other tech luminaries, including Palmer Luckey, co-founder of defense contractor Anduril Industries, and Joe Lonsdale, founder of venture capital firm 8VC.
Thiel’s Stance on Cryptocurrency
Peter Thiel is a known figure in the cryptocurrency realm, publicly championing Bitcoin (BTC) and digital assets. His involvement extends to backing Bullish, a crypto exchange that recently filed documents seeking an initial public offering (IPO).
Focusing on Startups and Riskier Firms
According to the reports, besides targeting cryptocurrency entities, Erebor’s strategic intent is to become a significant source of capital for early-stage startups and other companies considered “risky” in the traditional banking environment—a role previously filled substantially by the defunct SVB.
SVB Failure Had Wider Repercussions
The establishment of Erebor emerges in the wake of the March 2023 shutdown of Silicon Valley Bank by California’s financial regulator due to losses from rising interest rates, leading to a bank run. SVB was historically a key source of funding for venture capital-backed technology and life sciences companies, and its collapse triggered widespread effects across the US banking sector, resulting in the failures of Silvergate Bank, Signature Bank, and First Republic Bank.
The SVB failure precipitated a broader crisis, adversely impacting the digital asset markets, as crypto investment funds reportedly shed assets under management. While the operation was formally taken over by First Citizens Bank, Erebor aims to function within this landscape, highlighted by the image depicting the cascade of bank failures in the US during that period.
The aftermath underscored the strategic need for alternative financial infrastructure, particularly for riskier ventures and within the crypto sphere.
