Palmer Luckey, the leading entrepreneur in Orange County, already has Oculus VR and rapidly expanding Anduril Industries under his belt as startup unicorns.
Now he’s working with fellow President Donald Trump-supporting billionaires such as Peter Thiel and Joe Lonsdale to start a bank to aid fledgling tech companies and other potentially risky ventures.
The targeted starting valuation: $2 billion, according to news reports. That’s double the amount needed to break into the coveted “unicorn” category of startups worth $1 billion or more.
Followers of J.R.R. Tolkien will be pleased to learn that the bank will be called Erebor, N.A., the mythical mountain of riches in “The Hobbit.”
That name follows from other Tolkien titles – Thiel’s own Palantir and Luckey’s Anduril, to much speculation as to the meaning behind the use of the mythical names.
Ohio Bound
And if you’re into really colorful descriptions, you’ll be pleased to know that popular website PC Gamer has called Luckey “an occasional Bond villain” while the elusive Thiel is a “fellow Bond villain.”
Erebor will be based in Columbus, Ohio, near where Anduril is investing nearly $1 billion in its new 5-million-square foot “hyperscale” military manufacturing plant, dubbed Arsenal-1 (see story this page).
Luckey has not returned repeated requests by the Business Journal for comments on his latest venture.
Erebor, with a focus on cryptocurrency, is designed to serve startups, defense contractors, tech firms and crypto companies, according to investor website Benzinga.
The new venture will help fill the void left by the 2023 collapse of Silicon Valley Bank (SVB), which had a similar mission serving risky startups. SVB’s demise became the second-largest bank failure in U.S. history.
The known billionaire backers do not have major banking experience.
Cryptocurrency Focus
According to the charter application, the bank will be led by co-CEOs Owen Rapaport and Jacob Hirshman. Hirshman has served as a counsel at stablecoin company Circle.
Stablecoin is a cryptocurrency pegged to a currency such as the U.S. dollar and has less volatile value than other cryptocurrencies. The bank reportedly plans to hold stablecoins on its balance sheet.
“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 said in its 28-page application and cover letter for a bank charter.
The filing added that the national bank would “differentiate itself” by doing business with customers that “are not well served by traditional or disruptive financial institutions, in particular with respect to insufficient access to credit.”
The application was filed with the U.S. Treasury’s Office of the Comptroller and the Currency and published in late June.
The bank will have an office in New York City in addition to the headquarters in Columbus.
Digital Only Bank
Erebor would provide its products and services nationwide and globally. The bank will not be physically accessible to the public to make deposits, receive withdrawals or borrow money.
The filing doesn’t explicitly name Thiel and Luckey, but Reuters and The Financial Times, among others, confirmed the two men’s involvement. Lonsdale has also confirmed his participation, Reuters said.
Luckey and Lonsdale are not expected to be involved in the day-to-day management of the bank, the Financial Times said.
Erebor is the latest venture for the 32-year-old serial entrepreneur Luckey.
At age 21, he sold virtual reality gear maker Oculus VR, which he founded, to Facebook for $2.3 billion in 2014.
After being ousted from Facebook, now known as Meta, he returned to Orange County and founded Anduril in 2017. Early emphasis was on border security but has since pivoted more toward national military defense.
Anduril has been growing rapidly and now has a valuation of $30.5 billion.
Rivian Spinoff Riding Demand for Small Electric Vehicles
Also Inc., a spinoff from Irvine-based electric vehicle company Rivian, has raised $200 million from Greenoaks Capital to build small electric vehicles, Bloomberg reported, presumably including e-bikes.
The latest financing brings Also’s post-money valuation to $1 billion. If the valuation holds, it will be the second unicorn for Rivian founder and CEO RJ Scaringe.
A “stealth team” within Rivian (Nasdaq: RIVN) started working on small EVs several years ago.
Now established as its own company, Palo Alto-based Also plans to make micro-EVs of various shapes and sizes and is supposed to reveal the first designs at some point later this year.
“Something big is coming this fall,” Also says on its website. News reports say the company may be developing e-bikes, e-scooters and other “micromobility” offerings.
Also, which raised $105 million from Eclipse Ventures earlier this year when it was separated from Rivian, had more than 30 job openings posted on its website as of July 9.
In March, Rivian said it’s retained a substantial minority ownership stake in Also.
—Kevin Costelloe
Excerpts from Erebor, N.A. Charter Application
Here are some excerpts from the Palmer Luckey-backed application for a bank charter for startup Erebor, N.A. While the application does not name Luckey as a backer, he has reportedly confirmed his participation. The application was filed by the Washington office of well-known law firm Skadden, Arps, Slate, Meagher & Flom.
“The Bank will be a national bank and will operate as a banking organization providing traditional banking products, as well as virtual currency-related products and services, for businesses and individuals.
“The target market for the Bank comprises businesses that are part of the United States innovation economy, in particular technology companies focused on virtual currencies, artificial intelligence, defense, and manufacturing, as well as payment service providers, investment funds and trading firms (including registered investment advisers, broker dealers, proprietary trading firms, and futures commission merchants).
“The Bank will also serve select individual consumers in the high and ultrahigh net worth category who work for, or invest, in such companies, and provide certain deposit and payment services to qualifying foreign banking organizations. The Bank is not expected to have a bank holding company or branches during the de novo period. As discussed in Confidential Exhibit 4, the Bank is expected to have one subsidiary, Atticus Digital, Inc.”
—Kevin Costelloe
Hello, Columbus
Columbus, Ohio, has been chosen as the headquarters for the new digital bank planned by Palmer Luckey and his band of tech billionaires.
A bank charter application for the bank to be called Erebor, N.A. was published by the federal government in late June.
Ohio Chamber of Commerce President and CEO Steve Stivers said Erebor could attract even more tech companies to central Ohio.
“Whether it’s AI or crypto or defense or manufacturing, especially advanced manufacturing, those are going to be some innovation segments that Erebor is really focused on. I think that’s all great for Ohio’s economy,” Stivers told radio station WOSU on July 3.
Luckey has already been expanding Anduril into the Columbus area with its Arsenal 1 campus just south of the city in Pickaway County. The military drone manufacturer hopes to bring 4,000 jobs to the factory next to Rickenbacker International Airport.
The bank’s two offices will not be to the public to make deposits, receive withdrawals, or borrow money.