Erebor Bank, a technology-focused lender serving clients in crypto, artificial intelligence, defense, and manufacturing, is in advanced talks to raise approximately $1.5 billion in a funding round that would value the year-old firm at around $9.5 billion, the Financial Times reported, citing people familiar with the matter.

The capital infusion is designed to help Erebor meet a mandatory 12% leverage ratio that regulators require during its first three years of operation, even as the bank rapidly expands its balance sheet and lending activity. The startup-focused banking sector has seen renewed investor appetite following the collapse of Silvergate, Signature Bank, and Silicon Valley Bank in 2023, which left many crypto and technology companies without reliable banking partners and created an opening for new entrants like Erebor.

Investor Participation

Lux Capital, Human Capital, Valor Equity Partners, Andreessen Horowitz, and SV Angel are expected to make large commitments in the round. Existing investors, including 8VC and Haun Ventures, are also set to participate, according to the FT report.

If completed at the reported terms, the round would nearly double Erebor's private-market valuation in a matter of months. The FT noted that the bank raised capital earlier this year at a $4.35 billion valuation.

Rapid Deposit Growth

Since receiving final U.S. regulatory approval to operate in February, Erebor has aggressively grown its deposit base. Total deposits climbed from $1.1 billion at the end of March to $4.6 billion by the end of July, driven by clients in the crypto, AI, and defense sectors.

Erebor targets companies working in cryptocurrency, artificial intelligence, defense, and manufacturing. It also serves payment companies, investment funds, and trading firms. The bank's planned service offerings include deposits, credit, stablecoin products, treasury management, and payments. The inclusion of stablecoin services comes as the stablecoin market has grown significantly, with both fintech and traditional financial institutions increasingly exploring tokenized payment and settlement infrastructure.

Lending Expansion

As part of its push into lending, Erebor recently provided a $200 million credit facility to nuclear energy start-up Valar Atomics. Valar announced earlier this month that Erebor led the facility as administrative agent, working alongside JPMorgan, Crescent Cove, and Hercules Capital. The deal signals Erebor's intent to finance companies across frontier-tech sectors beyond crypto, aligning with its mandate to serve advanced manufacturing and energy infrastructure clients.

Source: CoinDesk