Blockchain startup R3 cuts fund-raising target to $150 million: source
- Netflix, Inc. (NFLX) Tops Q4 EPS by 1c; Subs Beat Views
- S&P 500 ends up slightly with boost from financials; Netflix up late
- Nestle Said Examining Takeover of Mead Johnson (MJN) - Source
- La Quinta Holdings (LQ) Gains on Plan to Split in Two
- After-Hours Stock Movers 01/18: (OCLR) (CSX) (NFLX) Higher; (AMDA) (RCII) (ZYNE) Lower (more...)
Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.
By Anna Irrera
NEW YORK (Reuters) - Blockchain company R3 CEV has reduced the amount it aims to raise from bank members in its first large round of equity funding to $150 million from $200 million and is changing the structure of the deal, according to a person familiar with the plans.
R3, a New York-based startup that runs a consortium of more than 70 financial institutions, now plans to give bank members a 60 percent equity stake in exchange for the funding, the source said.
More than 90 percent of its original 42 bank members have expressed an interest in investing, the source said.
Initially, it aimed to create a new company providing shared services for the owners, who would get a 90 percent stake. R3 would have run this utility for 10 years and retained a stake in it.
Morgan Stanley (NYSE: MS) and National Australia Bank
Most other banks have agreed to the new terms of the deal, but R3 does not expect all existing members to join the round, said the source.
R3's fundraising comes as banks and other large institutions ramp up their investments in blockchain, which is also known as distributed ledger technology. It first emerged as the technology underpinning digital currencies such as bitcoin but is now being adapted for use in more traditional financial tasks, such as transaction processing.
Other new companies are also looking to sell blockchain-based technology to banks. Competition among these startups has intensified over the past few months as they try to secure investments and deals with large institutions to provide the technology.
R3's funding will be raised in phases over the next nine to 12 months, the source said.
Through its consortium and technology development lab, R3 comes up with ways for the financial industry to use blockchain software.
According to the new terms of the deal, the banks will also acquire a stake in the development lab, which tests new blockchain-based applications.
The group's original 42 members have been given first dibs at investing in the company, followed by members of the company's development lab. If the $150 million target is not reached, the round will be opened to other strategic investors, such as a technology company, the source said.
Since it began operating in September 2015, R3 has rapidly gained the support from the world's largest banks, with members including UBS Group AG
Thomson Reuters Corp (NYSE: TRI) is also a member of R3.
In a statement, R3 said it expected members of the consortium to change over time, as the scale and scope of the project changed.
Although Goldman and Santander have abandoned R3, they have investments in other blockchain startups, including Digital Asset Holdings LLC, which is led by former JPMorgan executive Blythe Masters.
(Reporting by Anna Irrera in New York; editing by Lauren Tara LaCapra, Cynthia Osterman and Alan Crosby)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Mallinckrodt (MNK) to Pay $100M to Settle FTC, State Charges for Violating Antitrust Laws
- Goldman Sachs profit soars on bond-trading surge
- NetEase (NTES) PT Raised To $305 At Goldman Sachs, Maintains Buy
Create E-mail Alert Related CategoriesReuters
Related EntitiesDeutsche Bank, UBS, JPMorgan, Goldman Sachs, Morgan Stanley, Definitive Agreement, Bitcoin
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!