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Palmer Luckey's banking on Syria
There aren’t many stories in recent memory that have made me do a double take violent enough to risk whiplash, but The Information’s reporting that Palmer Luckey’s bank is eyeing a foray into Syria nearly landed me in a neck brace.
For the unfamiliar, Luckey is the larger-than-life founder with a seemingly endless wardrobe of colourful Hawaiian shirts, trademark goatee and mullet, and precious little in the way of a verbal muzzle. He’s also, arguably, one of the most captivating and talented entrepreneurs of his generation.
At just 21, he sold Oculus VR to Facebook, now Meta, in a deal announced at a cool $2 billion, before putting paid to any suggestion of being a one-trick pony by co-founding Anduril, one of the defining defence-tech companies of its generation, now reportedly valued at $90 billion in an employee share sale.
Following Silicon Valley Bank’s collapse in 2023, Luckey threw his hat into the banking ring too, for good measure, helping launch Erebor, named after, what else, the Lonely Mountain in J.R.R. Tolkien’s The Hobbit. Thus far, it's received backing from prominent VC firms including the likes of Lux Capital, Andreessen Horowitz and Peter Thiel’s Founders Fund.
Explaining the venture on tech talk show TBPN, he said he’d been considering starting a bank “primarily for my own personal use”, having struggled to find providers that understood his businesses.
In layman’s terms, Erebor is a US-chartered bank aimed at tech businesses, particularly those in areas such as defence, advanced manufacturing and digital assets. It takes deposits and makes loans, its pitch being that it understands customers whose businesses some conventional banks approach with considerable trepidation, if they’re prepared to touch them at all.
Luckey also wants to use dollar-backed stablecoins to settle payments around the clock, obviously.
“We’re an American bank that supports American companies,” he told John and Jordi.
Why, then, is a bank that’s reportedly attracted more than $7 billion in deposits since launching in February looking to a country that’s spent so long out in the cold? Its chair, Jacob Hirshman, has already travelled to Syria, according to the reporting.
Erebor’s overtures to Venezuela, long a fellow financial pariah, provide some insight into the thinking.
Bloomberg reported in May that Hirshman had made repeated visits to Caracas, with Erebor offering correspondent banking relationships and subaccounts for local banks’ customers.
For anyone understandably unfamiliar with the inner workings, a Venezuelan bank could use that relationship to help its clients access US banking and move money internationally. Erebor described those discussions at the time as preliminary.
That offers a possible model for Syria, although we don’t yet have a disclosed arrangement there to assess. It also helps explain how serving customers overseas could fit with Luckey’s explicitly American ambitions.
Needless to say, I’m not an expert on the Syrian banking system, so my first port of call was to Hani Al-Jundi, founder of SIMA Partners, whose work on the country’s economy I’ve found particularly inisghtful.
His assessment of how much things had improved in recent months was unvarnished.
“Six months ago, the banking system in Syria was very broken. Today it’s also still very broken.”
By way of context, the US has removed its comprehensive sanctions on Syria, although targeted restrictions remain on Assad associates and other designated individuals and groups…
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Unlock the full column, including why Syria’s banking system remains broken despite sanctions relief, whose interests Erebor’s arrival could serve, and what noon’s payments sale reveals about NEOPAY’s regional ambitions and noon’s priorities ahead of a potential IPO.
