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De novo banks face a structural problem that venture-style capital does not solve cleanly. A new lender needs regulatory capital before it can take deposits, extend credit, or access central bank facilities.
That requirement is non-negotiable, and it scales with ambition: the larger the intended balance sheet, the more equity has to go in first.
Erebor, the start-up bank backed by Palmer Luckey and supported by Silicon Valley investors, is raising $1.5 billion. At those terms, the round values the firm at $8 billion.
Reading the $8bn valuation An $8 billion price tag on a start-up bank is almost entirely a forward multiple. Established lenders trade against book value and current net interest income.
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