Arc: The future of Startup Finance
What Arc does
Arc is a financial technology company that helps venture-back companies diversify deposits & maximize yield across systemically-important banks. Today that includes $5.75M of combined FDIC & SIPC insurance & yields as high as 5.5% APY from US Treasuries
Arc's Current Landscape
The reality is that the market is dominated by legacy offline banks who have entrenched relationships in the startup ecosystem. That said, startup expectations have evolved, and traditional banks are unable to keep up. Next in line are Fintechs which offer greater diversification, higher FDIC coverage, and greater returns on idle cash. While the fintech players represent a low single digit percentage of the annual deposit and funding volume today, we believe that this share of wallet will increase significantly in short order. For example, following the SVB and FRB collapse earlier this month, the BAM Fintechs: Brex, Arc, Mercury took in 30% of deposits!
Arc’s Birth Story
Don, Nick and Raven, Arc’s 3 co-founders, met at Stanford Graduate School of Business. Don and Nick come from Private Equity and Investment Banking and Raven came from several startups, like Affinity and Ubiguity6, as well as large tech companies: Meta and Tesla. When they got out to the Bay Area they met dozens of founders and realized that early-stage SaaS companies were underserved by traditional financial institutions, despite strong business fundamentals.
The offline and bureaucratic processes that CEO Don Muir had become accustomed to during his time on Wall Street, prevented banks from serving startups efficiently. Through backend API integrations and scalable cloud-based infrastructure, Arc automates legacy underwriting processes, to better-servethe high-growth segment of the market at a lower marginal cost. At the same time, Arc is able to diversify startup deposits across systemically-important banks to protect 100% of their excess cash, while maximizing their yield across muttiple asset classes including ETFs, MMFs and US Treasuries.
Prior to Arc, startup founders and operators were forced to choose between two imperfect capital raising options to grow their business: the offline and relationship-driven nature of traditional banks or the dilution-prone nature of venture capital. Regardless of their choice, founders still had to wrestle with a slow and distracting capital-raising process. Founders we’re also forced to choose between accounts that provided protection or generated returns, which meant excess risk and missed upside.
Arc was intentionally built differently.
Arc partners with the largest and most systemically-important banks including Bank of New York Mellon, Goldman Sachs, JPMorgan Chase and Citi Bank to provide cash management services. The result is $5.75M of combined FDIC & SIPC insurance & yields as high as 5.5% APY from US Treasuries.
Arc makes unbiased, business fundamental-driven underwriting decisions. Startups are qualified for Arc funding algorithmically based on their operating metrics (e.g., growth rate, burn, runway, etc.). The result is funding offers that are provided in <48hrs and better pricing for startups who demonstrate positive business performance.
Since launching in 2021, Arc has distributed nearly $100M in financing to startups, attracted hundreds of millions in deposits and built an engaged community of thousands of software founders throughout the US. Over the last quarter, Arc signed more and bigger deals at a faster velocity than in our first 12 months in business combined. The team also signed game-changing partnerships (with Stripe, Atomic and BNY Mellon) and is actively working to increase the available FDIC protection and range of investment options in the platform. In time, Arc will become the #1 digital bank for startups.
Straight from Nick Lombardo
“At Arc, we’ve put culture at the center of how we build the business. Culture is always a work in progress, and while there’s always room to improve, we’ve learned a lot along the way.”
A Customer Story
Arc has always been a partner that we can rely on. The difference between the yield we were earning in a traditional bank and Arc’s bank account has been enough to hire an additional engineer and meaningfully extend our runway. - ---Taylor Lint, Founder & CEO, Swantide
The Arc team has always been a champion for startups. We made the decision to move our funds over so that we could run our business with peak efficiency and protection. Arc’s maximum insurance coverage through their various bank partner options is exactly the solution we were looking for. — Matt Iommi, Co-Founder & CEO, Fetii
The Team Culture
Arc is committed to building a company that reflects diverse communities. The executive team understands the importance of creating a workplace that welcomes diversity of thought, perspective, and background. They believe that diversity is essential to building a successful and a sustainable business.To that end, they actively seek to recruit and hire talented individuals from a wide range of backgrounds and experiences. One thread unites all Arc-itects: they are the best and brightest around.
Arc is the perfect place for highly motivated people who want to have an impact on day one. We are totally building the plane while we are flying it and every day the plane gets better.”
We move FAST but there's nothing standing in the way of getting sh*t done, which is awesome. People are smart, humble, hard working and thoughtful; and our investors are super engaged and incredibly helpful across the board with just about everything! It's exciting coming to work every day and feeling inspired by teammates and the leadership.”
The team is one of the best I've seen, which is especially important at a startup where team is everything. People are smart / motivated (the business results speak for themselves) and also incredibly caring.”
Check it out : https://www.arc.tech/
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