Tech’s new ‘Lonely Mountain’: Billionaires join hands to guard start-up treasures in Silicon Valley

A group of tech entrepreneurs led by Palmer Luckey, co-founder of military contractor Anduril, is preparing to launch a US bank aimed at serving start-ups and cryptocurrency businesses, filling a void left by the collapse of Silicon Valley Bank (SVB).

The new institution, to be named Erebor, has applied for a national bank charter, according to a regulatory filing made public this week. Erebor is backed by a roster of prominent technology investors, including Joe Lonsdale, founder of venture capital firm 8VC and a co-founder of defence company Palantir. Founders Fund, the venture capital group launched by Peter Thiel, is also among the investors, Financial Times cited two people familiar with the matter as saying.

The bank is named after the ’lonely mountain" from J.R.R. Tolkien’s The Lord of the Rings, the same literary source that inspired the names of Anduril and Palantir.

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According to the application, “the bank will be a national bank . . . providing traditional banking products, as well as virtual currency-related products and services, for businesses and individuals.” Erebor intends to target companies in what it describes as the “innovation economy,” with a focus on virtual currencies, artificial intelligence, defence, and manufacturing.

The filing said the bank would also serve individuals who work for or invest in these companies, and would work with non-US firms “seeking access to the US banking system.”

The bank’s founders began discussing the idea in 2023 after the collapse of SVB, which had been the preferred lender for many US start-ups. SVB’s assets were eventually acquired by First Citizens Bank, and a number of its bankers joined HSBC in the US However, many start-ups have since reported difficulty accessing capital and services, prompting efforts to create a new financial institution tailored to their needs.

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Erebor plans to set itself apart by focusing on customers that are “not well served by traditional or disruptive financial institutions, in particular with respect to insufficient access to credit,” the filing said.

The bank will be headquartered in Columbus, Ohio, with an additional office in New York. It plans to operate entirely digitally, marketing its products and services through a smartphone app and website.

The venture is expected to play a significant role in handling stablecoin transactions, a type of cryptocurrency pegged to real-world assets like the US dollar. The application notes Erebor aims to be “the most regulated entity conducting and facilitating stablecoin transactions.”

Luckey and Lonsdale, both major donors to Donald Trump during the 2024 presidential election, are not expected to be involved in Erebor’s daily operations, according to people familiar with the project. The bank will be led by co-CEOs Jacob Hirshman, a former adviser at crypto firm Circle, and Owen Rapaport, CEO of digital assets compliance company Aer Compliance. Mike Hagedorn, a former senior executive at Valley National Bank, will serve as president.

Some details of the application, including its equity structure, business plan, and shareholder information, were submitted confidentially and have not been made public.

Lonsdale confirmed he was financially backing the project but declined further comment. Luckey did not respond to a request for comment.