Arc, a digital bank for ‘high-growth’ SaaS companies, has raised $20 million in funding. Earlier this year, the business graduated from Y Combinator.
Arc, a company that aims to give SaaS entrepreneurs with a “one location to borrow, save, and spend,” has raised $20 million in a Series A round of investment. The business emerged from secret mode seven months ago with $150 million in debt investment and $11 million in startup money.
While it is still early, Arc believes that their solution, which provides loan financing as well as digital banking services to SaaS enterprises, has generated a lot of interest. Since the fourth quarter of 2021, the company’s revenue has climbed by 250% on average per month.
Stripe is a partner and one of the world’s largest and most valued private fintechs. When Arc first gained public attention in mid-January, the firm announced that more than 100 businesses had signed up for the Arc platform since the summer launch of its basic product, Arc Advance.
This technology allows founders to “convert future revenues into up-front investment.”
Arc has over 1,000 firms on its platform and is deploying “tens of millions of dollars in volume,” according to its co-founder and CEO, Don Muir. He also stated that Arc had a backlog of over $3 billion in demand from firms that have previously registered on its website for its Arc Advance funding programme.
Muir expects Arc to activate $500 million in assets and deposits for its clients over the next year.
Muir, Nick Lombardo (President), and Raven Jiang (CTO) founded Arc in January 2021 and incorporated it in April of the same year.
He stated, “The market is currently dominated by traditional offline banks with strong linkages to the startup industry. Fintech companies make for a modest percentage of the market’s annual deposit and financing volume.”
According to Muir, the startup’s most unique feature is that it offers financial services in addition to initial finance. “You’re seeing public market software values reduced in half, and it’s beginning to trickle down, all the way to Series A and even seed-stage valuations,” he adds.
For the first time in the startup ecosystem, entrepreneurs can convert future revenue into upfront cash, deposit that capital into a digital bank account with all of the bells and whistles of a conventional bank account, and spend that capital more effectively using our insights and analytics.”
Arc Treasury was introduced in June as a “digitally native and vertically integrated deposit account that allows entrepreneurs to access all of the banking services they require, such as checking, card issuance, and FDIC insurance eligibility.” Stripe assisted in the development of the product. Arc works with both bootstrapped and VC-backed “high-growth, premium” B2B software firms. The shifting macroenvironment, according to Muir, has resulted in a “substantial increase in demand.”
“You’re seeing public market software values cut in half, and that’s starting to trickle down,” he continued, “all the way down to Series A and even seed-stage valuations.”
Alternative sources of cash become more enticing as stock prices rise fast. While the San Francisco-based corporation refused to reveal its monetary value, Muir described it as a “major step forward.”
