PayPal co-founder Peter Thiel and several other tech billionaires are joining forces to establish a new financial organization to fill the gap left by Silicon Valley Bank (SVB) after its collapse, according to a report by the Financial Times.
Erebor: A bank for tech startups
The initiative to establish the commercial bank named Erebor is led by Palmer Luckey, co-founder of defense technology company Anduril, with support from Joe Lonsdale, co-founder of Palantir, and Peter Thiel's Founder Fund.
Erebor has applied for a national bank charter with the Office of the Comptroller of the Currency (OCC), a federal banking regulator. Like SVB, Erebor aims to serve venture-backed startups that have previously been rejected by traditional financial institutions. These companies include tech businesses focused on artificial intelligence (AI), defense, manufacturing, and cryptocurrency.
Filling the gap left by SVB and shaping the future
SVB was a large commercial bank that served many cryptocurrency companies and other startups backed by venture capital. The bank collapsed in March 2023 due to over-investment in low-yield bonds and other financial missteps, making it unable to withstand a mass withdrawal from tech customers. The collapse of SVB marked the second major failure in the U.S. banking system.
Erebor will have two co-CEOs, Owen Rapaport, co-founder of the software company Argus, and Jacob Hirshman, former advisor to Circle. Reports also indicate that Erebor plans to add stablecoins to its balance sheet, although it is still unclear which dollar-pegged token will be held.
The establishment of Erebor comes amid a burgeoning trend in digital assets during U.S. President Donald Trump's administration, who maintained a close relationship with the industry. Under Trump, Senate lawmakers passed the Genius Act, a legal framework for stablecoins, seen as a significant benefit for the digital asset sector. Additionally, a market structure bill aimed at facilitating cryptocurrency companies operating in the U.S. is expected to become law by the end of this year.
Meanwhile, the price of Bitcoin – often used as a gauge of the strength of the cryptocurrency market – reached two all-time highs a few months after President Trump took office, indicating promising activity in the crypto market and in Congress that has fueled increased merger and acquisition activity across the industry, as well as a boom in crypto IPOs.