The company raised $20 million in a Series A round of funding.
Seven months ago, Arc emerged from stealth with $150 million in debt financing and $11 million in seed funding. In March, the startup graduated.
Arc says it has seen strong early interest in its offering, which offers both debt funding and digital banking services to software as a service companies. Since the fourth quarter of 2021, the company's revenue has increased by 250%. One of the world's largest and most valuable private financial technology companies is partnering with it.
More than 100 companies have signed up for the Arc platform since it was launched last summer, according to the company. It's a way to convert future revenue into capital. Today, Arc has more than 1,000 companies on its platform and is in the process of getting tens of millions of dollars in volume, according to the company's co- founder and CEO.
He said that Arc has a large amount of demand for its Arc Advance funding product from companies that have already signed up. Over the next year, Arc will have over $500 million of funding and deposits activated.
The company was incorporated in April of that year by the three founding members.
Left Lane led Arc's Series A financing, which also included participation from NFX, Y Combinator, Bain Capital Ventures, Clocktower Technology Venture, Torch Capital and Atalaya.
All of our existing investors with pro rata rights came into the round again.
There are a lot of startup that are offering financing alternatives other than venture capital. The companies are appealing to lend because of their recurring income.
There are other players in the space.
Arc doesn't see the competition as a bad thing.
He said that the market is currently dominated by the legacy offline banks. There is a low percentage of the annual deposit and funding volume in the market.
The biggest differentiating factor of the startup is that it also offers banking services.
He said thatArc is the first digital business bank that is purpose-built for high-growth startup. For the first time ever, startups can convert their future revenue into upfront capital, deposit those funds into a digital bank account with all the bells and whistles of a traditional bank account, and use our insights and analytics to spend that capital, more efficiently, which is revolutionary for the startup community.
In June, Arc announced the launch of its Arc Treasury offering, which it describes as a "digitally native and vertically integrated deposit account that enables startups to access all of the banking services they need." The product was built with a payment processing company.
Most of the software companies Arc works with are B2B. A "meaningful increase in demand" has been caused by the evolving macro environment.
In the public markets, software valuations are being cut in half and that is starting to trickle down to Series A and even seed stage valuations. Alternative sources of financing are more attractive now that equity is more expensive.
The company's valuation was a significant step up. Arc has doubled the size of its team in the last few months.
Not to jinx it, but SaaS valuations appear to be staging a recovery
The founder of Left Lane Capital decided to lead Arc's round as a new investor because of the market opportunity.
Availability for capital for founders is going to be a bigger issue now and more prominent issue in their minds than it has been for several years prior to this when equity markets were.
There is a broad vision for the future product roadmap of a much moreholistic banking solution, where you tie in Treasury, you tie in the FDIC insured bank account and you have a much more complete solution that is ultimately Solving a lot of needs for the end customer.
I launched my weekly newsletter on May 1st. It will be in your inbox if you sign up here.
Arc wants to build the de facto finance solution for SaaS startups
All Rights Reserved © 2024
