Crypto-friendly bank Erebor in talks to raise $1.5 billion at $9.5 billion valuation: FT

Lux Capital, Human Capital, Valor Equity Partners, Andreessen Horowitz and SV Angel are engaged in advanced discussions to raise approximately $1.5 billion in a financing round for Erebor Bank, a year-old financial institution focused on the cryptocurrency sector. The reported valuation of Erebor Bank following this funding round is expected to reach around $9.5 billion. Existing investors 8VC and Haun Ventures are also poised to participate in the capital raise, according to sources familiar with the matter.

Erebor Bank's deposit base has been growing, reaching $4.6 billion by the end of July, a significant increase from $1.1 billion at the end of March, as reported by the Financial Times. The bank's target clientele includes firms involved in cryptocurrency, artificial intelligence, defense, and manufacturing, as well as payment companies, investment funds, and trading firms, with services encompassing deposits, credit, stablecoin products, treasury management, and payments.

The bank secured final U.S. regulatory approval to operate in February, a condition necessitating the maintenance of a leverage ratio of at least 12% during the initial three years of its existence, making the fundraising round crucial as its balance sheet expands. Erebor Bank is actively pursuing a $200 million credit facility for the nuclear startup Valar Atomics, with Erebor serving as the administrative agent alongside JPMorgan, Crescent Cove, and Hercules Capital.

The bank had previously raised capital in the year at a $4.35 billion valuation, indicating that the proposed round would nearly double its private-market valuation within a short timeframe.