Erebor Bank, known for its focus on cryptocurrency, is negotiating to secure approximately $1.5 billion in a funding round that would value the bank at around $9.5 billion, according to a report from the Financial Times.
Deposits Surge from $1.1 Billion to $4.6 Billion in Just Four Months
The planned capital injection aims to satisfy regulatory requirements for a 12% leverage ratio while facilitating an expansion in lending activities, including a $200 million credit line for Valar Atomics.
As of the end of July, Erebor's total deposits soared to $4.6 billion, a significant increase from $1.1 billion in March, largely attributed to clients in the cryptocurrency, artificial intelligence, and defense sectors.
Investors such as Lux Capital, Human Capital, Valor Equity Partners, Andreessen Horowitz, and SV Angel are expected to contribute significantly to this funding round. Existing backers, including 8VC and Haun Ventures, are also anticipated to participate, as reported by sources familiar with the negotiations.
Erebor Bank is targeting businesses involved in cryptocurrency, AI, defense, and manufacturing, and also caters to payment processors, investment funds, and trading companies. Its offerings are set to include deposit accounts, credit services, stablecoin solutions, treasury management, and payment services.
The bank obtained final approval to operate in the U.S. in February and must maintain a leverage ratio of at least 12% during its initial three years, making this new capital crucial for its growth.
Part of Erebor's lending strategy involves a $200 million credit facility for Valar Atomics, a nuclear startup, which announced that Erebor is leading the facility as its administrative agent, collaborating with JPMorgan, Crescent Cove, and Hercules Capital.
Earlier this year, Erebor was valued at $4.35 billion, indicating that the new funding round could nearly double its valuation in just a few months.